The risk of unforeseen ground or site conditions remains an ever-present risk in most construction projects and the contractual clauses allocating such risk are usually some of the most negotiated provisions in any construction contract. Mark Pantry asks whether the publication of the JCT Design and Build Contract, 2024 edition changed the perceived standard position in favour of the contractor.
In our 2021/22 Annual Review, I wrote an article about ground risk and the ways in the which the main standard form contracts used in the United Kingdom, the JCT and NEC4 suite of contracts, approach and allocate such risk.[1]
To briefly summarise my previous article: where a fixed price construction contract is silent on ground risk or site conditions, then the standard position is that such risk sits as the contractor’s responsibility in terms of price and programme. This is based on the common law principle that in promising to undertake works for a fixed price, the contractor is promising to complete those works even where the works are more difficult or more expensive for the contractor to complete.
The article went on to consider the then current edition of the JCT Design and Build Contract, 2016 edition (“JCT DB 2016”). JCT DB 2016 is silent on most types of ground risk other than the discovery of antiquities on site. Where antiquities or “other objects of interest or value” are found on the site, then the standard form JCT DB 2016 allows the contractor to claim an extension of time and an addition to the contract sum to the extent that such discovery delays the works.
There are no other provisions in the JCT DB 2016 which would ordinarily entitle the contractor to an extension of time or an addition to the contract sum, and so it must follow that the contractor takes the risk in terms of price and programme where it makes a discovery of anything in the ground which is not an antiquity or object of interest or value.
JCT Design and Build Contract, 2024 edition
The JCT Design and Build Contract, 2024 edition (“JCT DB 2024”), which was released earlier this year as part of the wider 2024 update of the JCT suite of contracts, appears to change the JCT’s standard approach to ground risk and existing site conditions. New clauses 3.15.3 and 3.15.4 of the JCT DB 2024 extend the pre-existing procedure for antiquities in JCT DB 2016 to the discovery of “any asbestos, contaminated material or unexploded ordinance” on the site.
There are further amendments to clause 2.26.4 and clause 4.21.3 of the JCT DB 2024 which allows the contractor to make an application for an extension of time or addition to the contract sum on the discovery of any asbestos, contaminated material or unexploded ordinance or on receipt of the employer’s instructions in relation to the same. The contractor is only entitled to an extension of time or addition to the contract sum to the extent that the “presence of asbestos or contaminated material has been identified in the Contract Documents and/or any such material has been brought on to the site by the Contractor or any Contractor’s Person”. This clarification is presumably included to prevent the contractor trying to claim relief for contamination which it, or a subcontractor, has brought on to site.
The drafting does raise some queries about the application of such clauses to asbestos or contaminated material identified in the Contract Documents. For example, if the Contract Documents identify a certain quantity of asbestos in a certain part of the site, but the contractor discovers a greater quantity of asbestos in a different part of the site, is the contractor only entitled to an extension of time and additional costs for the quantity of asbestos discovered in excess of that which was identified in the Contract Documents? It is also noted that these clarifications do not apply to unexploded ordinance and so, as drafted, a contractor should be entitled to additional time and money where it discovers unexploded ordinance which was identified in the Contract Documents.
A move towards NEC4?
The above amendments to the JCT DB 2024 edition perhaps suggest a move by the JCT towards an approach which is more familiar to NEC users. The NEC4 Engineering and Construction Contract includes as a compensation event (entitling the contractor to additional time and money) the encountering of “physical conditions” within the site which an experienced contractor would have judged to have such a small chance of occurring, having regard to all the information available to it, that it would have been unreasonable to allow for such conditions.
The difference between the JCT and NEC approaches remains the test of foreseeability which is present in the NEC4 but not the JCT DB 2024. The discovery of asbestos, for example, in a cut and carve project to a building of a particular age would be completely foreseeable to a contractor, but that contractor would be entitled to additional time and money under the JCT DB 2024 except where such asbestos is included in the Contract Documents.
The new provisions on ground risk and site conditions do then move the “standard” position more in favour of the contractor, but this is only in relation to the standard form JCT DB 2024, and these provisions are frequently amended. As I concluded in my 2021 article, the parties to a construction contract must always give due regard to the impact of ground risk and the encountering of adverse site conditions to reach agreement on how this risk should be allocated between the parties.
[1] https://www.fenwickelliott.com/knowledge-hub/annual-review/ar-2021/what-lies-beneath-ground-risk-and-site-conditions/https://www.fenwickelliott.com/research-insight/annual-review/2021/ground-risk-site-conditions