[ What follows are excerpts from the 91 page NRC document on cost overruns. As energy declines, future new roads aren’t likely to be built, and existing roads unpaved, so I didn’t excerpt much. Alice Friedemann www.energyskeptic.com ]
NRC. 2016. NCHRP Influence of Geotechnical Investigation and Subsurface Conditions on Claims, Change Orders, and Overruns. National research council, National Academies Press.
Subsurface conditions are frequently considered to represent significant elements of technical and financial risk for highway construction projects. Unfortunately, information quantifying these risks is rare. This Synthesis documents the extent and type of claims, change orders, and cost overruns from subsurface conditions for state departments of transportation (DOTs). The report also identifies practices used by agencies to reduce such claims, change orders, and cost overruns.
Nearly 70% of responding agencies have minimum subsurface investigation requirements that are equal to or generally consistent with AASHTO specifications and guidelines. Fourteen percent of the responding agencies do not have minimum subsurface investigation requirements, 10% have requirements exceeding AASHTO specifications and guidelines, and the other responding agencies have requirements that are either materially different from AASHTO specifications and guidelines (6%) or less stringent than AASHTO specifications and guidelines (2%).
The most common causes of claims, change orders, and cost overruns resulting from subsurface conditions included: • Pile overruns; • Groundwater shallower than expected, affecting many types of construction; • Seepage problems, including those requiring dewatering, which was identified as being notably more costly than other causes; • Misclassified or mischaracterized subgrade, resulting in quantity revisions related to pavements, earthwork, and removal and replacement requirements for foundations; • Unanticipated rock excavation, especially that when encountering rock shallower than expected or encountering rock at foundation locations where it was not expected; and • Mischaracterized rock for drilled shaft construction.
The survey revealed the following quantitative information regarding the frequency and cost of claims, change orders, and cost overruns attributed to subsurface conditions: • The annual cost of change orders resulting from subsurface conditions was commonly in the millions of dollars and as much as $10 million per agency. • The total share of claims, change orders, and cost overruns attributed to subsurface conditions out of all claims, change orders, and cost overruns was 5% by number and 7% by cost. • The cost of subsurface condition change orders approaches 1% of the agencies’ total budgets for new construction. • Survey results indicated that the impact of subsurface conditions claims, change orders, and cost overruns is particularly significant on a project level. For instance, for one agency the cost of the average subsurface condition change orders alone consumed 7% of the associated project budget for one agency. The impact on some individual project budgets was likely much greater than 7% considering the variability of change orders.
Relatively modest changes to subsurface investigation practices can produce considerable reductions in claims, change orders, and cost overruns, particularly when the changes are tailored to a specific, recurring problem. For instance, Florida DOT reduced earthwork claims by requiring that plans show hard material that cannot be excavated using a backhoe with rock patterning rather than patterns associated with soil.
Communication and training involving a broad spectrum of agency and contractor personnel (including designers, contractors, inspectors, and field crews) appear to be a critical component to realizing the benefits of improvements to site characterization practices. Examples of such communication include agency guidelines and specifications, contract and bid documents, and regular training opportunities.
Improving subsurface investigation practice has clear benefits for design, even if substantial reductions in claims, change orders, and cost overruns are not achieved. • Improving the accuracy of boring location information can be effective in reducing claims, change orders, and cost overruns, especially for construction sites with significant spatial variation. • Implementing minimum standards for subsurface investigation and site characterization was reported to reduce claims, change orders, and cost overruns. After publishing its Geotechnical Design Manual, South Carolina DOT observed fewer claims associated with excavation equipment requirements and improved accuracy of plan earthwork quantities.
INTRODUCTION
Risks associated with geotechnical issues are significant for many construction projects and many if not most of these risks are directly or indirectly affected by the quantity and quality of subsurface investigations. Baynes (2010) found that the likelihood of experiencing geotechnical problems that significantly impact project costs or schedule on major infrastructure projects is between 20% and 50%. Other studies have found similar results for various sectors of the construction industry
GEOTECHNICAL CHANGE ORDERS AT INDIANA DEPARTMENT OF TRANSPORTATION
- The average cost of geotechnical change orders was 1.3% of the estimated total construction costs. • The cost of geotechnical change orders was just over 10% of the total cost of all change orders. • Approximately one-quarter of the projects (84 of 300) included geotechnical change orders, with many of these projects including more than one geotechnical change order.
Prezzi et al. (2011) studied INDOT change orders associated with work done by the agency’s geotechnical office over a 5-year period beginning in 2003. The work was motivated by an agency perception that change orders “attributed to geotechnical conditions” were “excessive” and perhaps increasing; the research was designed to quantify the number and cost of geotechnical change orders and to develop guidance for reducing them. The study included three components:
- A national survey similar to that conducted for this synthesis. 2. Analysis of change order information from the ten largest contracts per year in each of INDOT’s six districts (300 contracts total). 3. Thirteen interviews with agency project engineers and external consulting engineers familiar with INDOT projects and practices.
Four main causes for geotechnical claims based on the interviews were summarized, although some of the causes are associated more with design issues than with investigation problems: • Failure to identify poor subgrade that was frequently attributed to inadequate site investigation, but also resulted from improper plan elevations. • Pile overruns and underruns, which occur when the as-built driven pile depths are different from those shown on plans. • Erosion control material quantity errors often associated with underestimating riprap and geotextile quantities as a result of mischaracterizing the soil drainage conditions. • Mechanically Stabilized Earth wall construction, although the changes were mostly related to no geotechnical aspects such as wall geometry conflicting with surface drainage lines.
Mott MacDonald and Soil Mechanics, Ltd. (1994) studied the effect of subsurface investigation on construction cost overruns by examining results from a database of 58 transportation projects in the United Kingdom. Three-quarters of the projects had cost overruns greater than 10% of the contract value. The authors reported “about half” of the overruns resulted from geotechnical causes, the most common being (1) problems from seepage and groundwater, (2) encountering materials different in classification from those anticipated, and (3) removal and replacement of additional unsuitable material. The direct geotechnical cost overruns averaged 3% of contract cost, which the authors compared with an average of 1% of contract cost spent on site investigation. Indirect claims resulting from delay and disruption were more significant, amounting to 5% of contract cost. It was noted that while most of the direct costs would have been required even with an adequate site investigation, the indirect overruns could have been avoided.
A similar study was undertaken by the U.S. National Committee on Tunneling Technology (USNCTT), which studied the effect of geotechnical site investigation on construction changes and claims. USNCTT described differing site condition change orders and claims as “many” and “costly” (U.S. National Committee on Tunneling Technology 1984). Indeed, Gould (1995) summarized the data from the USNCTT study as including claims that amounted to 12% of the overall construction costs. The USNCTT study included 87 major tunneling projects constructed over a 20-year period. USNCTT examined the ratio of completed cost to engineer’s estimate versus subsurface exploration quantity and cost data, which were available for 36 of the projects. The resulting plots reveal significant scatter, but USNCTT noted that engineer’s estimates become more reliable as the subsurface exploration quantity and cost increase. USNCTT recommends 1.5 linear feet of borehole per route foot of tunnel; according to the study, the cost of such an investigation is roughly equivalent to 3% of construction cost.
Finally, improved subsurface investigation has other benefits for infrastructure projects. Many studies have noted that improved subsurface investigation results in design efficiencies as well
The second most common cause of failure, noted in 15 of the 37 cases, was “lack of disclosure of risks, uncertainties, and consequences,” meaning the engineer failed to effectively advise owners or contractors about geotechnical risks that ultimately came to fruition. The most common cause of failure was “recommendation not followed by client or contractor,” which has similar albeit more obvious roots in human error. The authors’ recommendations emphasize the responsibility of management personnel to staff and train technical personnel appropriately and to “deal with the real need for intelligent disclosure of risks, uncertainties, and consequences.
The findings of Baynes (2010), Clayton (2001), and Moorehouse and Millet (1994) suggest that human effects are a primary cause of subsurface conditions claims, change orders, and cost overruns, likely equal in importance to the more tangible effects of geotechnical investigation and construction practices.
HUMAN EFFECTS ON SUBSURFACE CONDITIONS CLAIMS, CHANGE ORDERS, AND COST OVERRUNS EFFECT OF CONTRACTING PRACTICES ON SUBSURFACE CONDITIONS CLAIMS, CHANGE ORDERS, AND COST OVERRUNS
Interestingly, several studies have concluded that geotechnical risks are not exclusively attributable to ground conditions, but also involve human contributions. Based on the collective evaluation of several studies of geotechnical risks, Baynes (2010) concluded that “available information suggests that the ground conditions and the project staff responsible for the geo-engineering process are both significant sources of geotechnical risk and that the project staff may actually be the largest source.” Clayton (2001) described this “human” aspect of geotechnical risk as follows: Even a quick reading of literature related to claims, change orders, and cost overruns attributed to subsurface conditions reveals that contractual issues play a significant role. Construction contracts allocate risks between owner and builder. Typically, subsurface risks are allocated to owners through a differing site condition clause. Contractual issues are not a focus of this synthesis; however, two contract topics—bid documents and design-build arrangements—are summarized here because of their relevance to the synthesis topic. There are numerous ways in which the ground can cause problems for construction, for example due to chemical attack, heave, subsidence, groundwater flow, slope failure, excessive foundation settlement, and so on. Because of the considerable range of risks the ground can pose, it is relatively easy for an inexperienced or non-specialist designer, perhaps using routine
During the agency interview, SCDOT discussed the effect of its manual on claims, change orders, and cost overruns.
SUMMARY OF COMMON CAUSES OF SUBSURFACE CONDITIONS CLAIMS, CHANGE ORDERS, AND COST OVERRUNS AND LESSONS LEARNED FROM ALL CASE EXAMPLES
Common Causes of Subsurface Conditions Claims, Change Orders, and Cost Overruns The agency interviews focused primarily on methods of reducing claims, change orders, and cost overruns attributed to subsurface conditions; however, the conversations also revealed common causes. The following list summarizes some of the most frequent situations and applications associated with subsurface conditions claims, change orders, and cost overruns. • Pile overruns and underruns. • Higher than expected groundwater for – Retaining walls, – Earthworks, – Utility and sewer work, and – Drilled shaft installation. • Misclassified or mischaracterized subgrade for – Pavements, – Embankments, and – Retention ponds. • Unanticipated rock during foundation construction; such claims are especially frequent for sound barrier walls and other secondary structures with relatively small loads, relatively large numbers of foundations, and relatively sparse borings compared with more significant structures. • Mischaracterized rock for drilled shaft construction, leading to improper equipment selection and construction delays.