Influence of Geotechnical Investigation and Subsurface Conditions on Claims, Change Orders, and Overruns (2016)

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INFLUENCE OF GEOTECHNICAL INVESTIGATION AND SUBSURFACE CONDITIONS ON CLAIMS, CHANGE ORDERS, AND OVERRUNS Subsurface conditions are frequently considered to represent significant elements of techni- cal and financial risk for infrastructure projects. Unfortunately, information quantifying these risks is rare. Such information is valuable for identifying both the scope of the problem and potential practices to reduce claims, change orders, and cost overruns. The objective of this Synthesis is to characterize the nature of claims, change orders, and cost overruns resulting from subsurface conditions for U.S. transportation agencies, and to identify practices used by agencies to reduce such claims, change orders, and cost overruns. The information in this Synthesis is derived from a literature review, a survey of transporta- tion agencies, and case examples from state agencies with experience reducing claims, change orders, and cost overruns resulting from subsurface conditions. The Synthesis addresses: • The scope of subsurface investigation required by transportation agencies; • Causes of claims, change orders, and cost overruns attributed to subsurface conditions; • Ranges of costs and prevalence of claims, change orders, and cost overruns attributed to subsurface conditions; and • Successful practices to reduce claims, change orders, and cost overruns. The survey was sent to 55 agencies: every state department of transportation (DOT) including the District of Columbia and Puerto Rico and the three Federal Lands Highway divisions. The survey was directed to agency geotechnical engineers, many of whom shared responsibility for completing the survey with construction personnel. Fifty-one responses were received, including 46 from the DOTs, a response rate of 92% for the state agencies. The survey consisted of three parts: Part One addressed subsurface investigation practices; Part Two requested qualitative information about claims, change orders, and cost overruns; and Part Three requested quantitative information. Part Three was deemed to be optional because the information requested was difficult for many agencies to gather. Eleven agencies included responses to Part Three. Five of the agencies that indicated decreases in subsurface conditions claims, change orders, or cost overruns were selected as case examples, which were developed by reviewing agency documents and interviewing agency personnel. Nearly 70% of responding agencies have minimum subsurface investigation requirements that are equal to or generally consistent with AASHTO specifications and guidelines. Four- teen percent of the responding agencies do not have minimum subsurface investigation require- ments, 10% have requirements exceeding AASHTO specifications and guidelines, and the other responding agencies have requirements that are either materially different from AASHTO speci- fications 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; SUMMARY

2 • 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 condi- tions 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. Results of the Synthesis survey strongly suggest that, on average, claims, change orders, and cost overruns have neither increased nor decreased since 2005, although some agencies have observed increases and others decreases. This finding applies to all claims, change orders, and cost overruns, as well as to those attributed to subsurface conditions. The case examples were selected from agencies that reported decreases in subsurface conditions claims, change orders, and cost overruns. The case examples, along with some discoveries from the literature, revealed several practices reported as being effective for reducing claims, change orders, and cost overruns. Many of the effective practices summarized here do not require additional agency investment. • In general, 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. Modest “directed” measures appear to be more effective and less costly to implement than “across-the-board” changes. • Communication and training involving a broad spectrum of agency and contractor per- sonnel (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 specifica- tions, contract and bid documents, and regular training opportunities. • Improving subsurface investigation practice has clear benefits for design, even if sub- stantial 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 signifi- cant spatial variation. • Implementing minimum standards for subsurface investigation and site characteriza- tion was reported to reduce claims, change orders, and cost overruns. After publishing its Geotechnical Design Manual, South Carolina DOT observed fewer claims associ- ated with excavation equipment requirements and improved accuracy of plan earthwork quantities.

3 The scarcity of published quantitative information regarding claims, change orders, and cost overruns attributed to subsurface conditions underscores the value of the survey findings of this Synthesis. The findings are motivation for additional research to reduce uncertainties regarding subsurface conditions claims, change orders, and overruns and helped to identify areas where modifications to agency practices could produce notable cost or performance improvements. Suggested research topics are introduced here: • Investigation of improved methods of archiving, tracking, and coding claims, change orders, and cost overruns because they represent significant learning opportunities for agencies. • It is important that specific risks of subsurface conditions claims, change orders, and cost overruns be quantified. This topic will require collection of project-level data regarding subsurface conditions claims, change orders, and cost overruns. The informa- tion collected for this Synthesis is derived from agency-level totals, whereas project- level information (causes of specific claims, change orders, and cost overruns and details regarding corresponding geotechnical investigations) is necessary to accurately quantify specific risks. • Evaluation of the effect of geotechnical investigation scope requirements to establish a consistent level of risk of claims, change orders, and cost overruns for projects with varying geotechnical challenges. • Identification of the most effective use of cone penetration testing, geophysical meth- ods, and other alternative techniques within the scope of geotechnical investigations. Use of conventional boring explorations was reasonably consistent among survey agen- cies; however, the use of other types of investigation varied widely. • Study of agency practices regarding communication and training related to geotechnical investigation and information is essential. Communication and training practices were reported as having a notable effect on subsurface conditions claims, change orders, and cost overruns.