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5 METHODOLOGY AND OUTLINE Information was acquired three ways: a literature review, a survey of transportation agencies, and interviews regarding several detailed case examples. These activities are summa- rized here, and results for each are presented in chapters two, three, and four, respectively. Conclusions are presented in chapter five. Literature Review References relevant to each of the four objective topics were reviewed and are summarized in chapter two. The lit- erature review begins by examining and summarizing U.S. transportation practices for subsurface investigation. Next it presents the experience of Indiana Department of Transpor- tation (DOT) with geotechnical change orders, which was documented in previous research with objectives similar to those of this Synthesis (Prezzi et al. 2011). References related to the effect of subsurface investigation on claims, change orders, and cost overruns are also documented in this chapter. The literature review concludes by examining human effects (essentially, claims resulting from an engineering failure to rec- ognize risks) and those effects related to contracting practices (i.e., project delivery mechanism and bid documents). Survey A three-part survey was administered electronically to 55 agencies, including the state transportation agencies for all 50 states, Puerto Rico, and the District of Columbia, as well as the three divisions of the FHWA Office of Federal Lands Highway. Fifty-one agencies responded to the survey, includ- ing 46 of the state DOTs, which corresponds to a response rate of 92% for the state agencies. Part One of the survey con- tained questions related to subsurface investigation practices; Part Two included general, mostly qualitative questions con- cerning claims, change orders, and cost overruns. Part Three requested specific quantitative information regarding claims, change orders, and cost overruns. Part Three was considered optional because the quantitative data requested are not readily available for many agencies owing to the difficulties explained here. The survey was distributed to agency geo technical engi- neers; however, the survey instructions encouraged these engineers to share the survey with construction colleagues, 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 (e.g., Hoek and Palmeiri 1998; Clayton 2001). Specific data regarding the extent of geotechnical issues experienced by U.S. transportation agencies are lacking, and the significance of subsurface conditions in the totality of claims, change orders, and cost overruns is uncertain. The information regarding the number, cost, and type of claims, change orders, and cost overruns attributed to subsurface conditions provided in this Synthesis is useful in defining the extent of the problem; a necessary first step toward solv- ing any problem. There is no single approach to reducing risks associated with subsurface conditions; however, many approaches have been implemented by different trans- portation agencies with varying success and expense. This synthesis defines the extent of the problem and identifies potential solutions by documenting transportation agency experience. OBJECTIVES The purpose of this Synthesis is to document the frequency, cost, and type of claims, change orders, and overruns attrib- uted to subsurface conditions in transportation infrastructure construction and identify measures taken by transportation agencies to reduce such claims, change orders, and cost over- runs. These objectives were achieved by collecting information related to â¢ The scope of subsurface investigations required by trans- portation agencies; â¢ Causes of claims, change orders, and cost overruns attributed to subsurface conditions; â¢ The range of costs and prevalence of claims, change orders, and cost overruns attributed to subsurface con- ditions; and â¢ Measures taken to prevent or reduce risks of claims. chapter one INTRODUCTION
6 especially for assistance with completing Parts Two and Three. The survey provided the following definitions to encourage consistency among responses: â¢ Claim: A claim is a legal demand by a contractor for additional compensation or time when the contractor believes he or she is entitled to it under the terms of the contract documents. Potential claim resolutions include denial or rejection, a change order for additional com- pensation or additional time, or other resolutions involv- ing dispute review boards, mediators, or courts. â¢ Change order: A change order is a formal modification of the scope of work established in contract documents, often including adjustments to compensation and/or schedule. â¢ Cost overrun: A cost overrun refers to instances when the cost of a project or bid item at project completion exceeds its initially contracted cost. Case Examples Several agency survey responses noted success in reducing claims, change orders, and cost overruns attributed to sub- surface conditions. Additional investigation into the practices and experiences of these agencies was performed by conduct- ing interviews with agency personnel and reviewing available agency documents. The agency interviews were also used to compile a list of frequently encountered claims, change orders, and cost overruns attributed to subsurface conditions. Chapter four includes that list as well as a summary of lessons learned from each of the five agencies. DIFFICULTY OF EVALUATING DATA REGARDING CLAIMS, CHANGE ORDERS, AND COST OVERRUNS Several factors complicated the collection and evaluation of quantitative data regarding claims, change orders, and cost overruns. Primarily, these factors relate to how the agencies organize databases of claims, change orders, and cost over- runs. First, agency definitions of claims, change orders, and cost overruns do not necessarily align with the definitions provided previously. Also, parsing out causes for each claim, change order, and cost overrun is difficult. Frequently, a single reason code is assigned to each incident, and âsubsurface conditionsâ is not necessarily a typical reason code. Even when claims, change orders, and cost overruns attributed to subsurface conditions could be separated from the entire set of claims, change orders, and cost overruns, multiple causes are possible and some, such as design issues or agency com- munication issues, are not necessarily related to geotechni- cal investigation. Furthermore, all of these factors depend on unique agency practices and the perspectives of specific survey respondents. The confounding of subsurface conditions claims, change orders, and cost overruns resulting from geotechnical inves- tigation issues with those of design or communication issues was not unique to the quantitative portion of the survey; infor- mation from the literature review and case examples also indicates the overlap. Discussions throughout this Synthesis consider all causes of subsurface conditions claims, change orders, and cost overruns; however, the primary focus is on the scope of geotechnical investigations. DEFINITIONS This report makes frequent reference to the concept of risk, which is fundamental to construction claims, change orders, and cost overruns. For the purposes of this report, risk is defined as the product of the probability of an event occurring and the costs expected to be incurred if the event occurs. Thus, if the probability of experiencing pile overruns greater than 10 ft is 5% and the cost of 10-ft overruns totals $50,000, the risk of pile overruns greater than 10 ft is $2,500. None of the other references to risk used in this report are so specific as to define probabilities, and most do not include cost informa- tion; however, the concept is the same as that presented for the pile overrun example. For the purposes of this report, the frequently used term geotechnical investigation refers to the process of identifying subsurface materials and describing their engineering proper- ties through explorations including, but not limited to, borings, in situ test methods, and laboratory tests.