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117 Chapter 4: Conclusions and Suggested Research The emerging findings that have been identified and analyzed so far in this research can be summarized in five interrelated elements: Benchmark of current practices; Perceptions of the geotechnical risk; Strategies for aligning the perceived the geotechnical risk; Tools for managing geotechnical risks; and potential Solutions that have been identified to achieve an aligned approach towards managing the geotechnical risks in DB projects. 4.1 Benchmarks: Using the different research instruments explained throughout this report, the following practices of the industry have been identified as the most relevant to depict how the geotechnical risks are being managed: 1. Significant geotechnical risks do not constrain the selection of DB as the project delivery method: The surveys and case study interviews performed in this research have shown owners do not consider the geotechnical risk as a factor in deciding if a project will be delivered using DB. Moreover, the most common factor expressed by DOTs is time savings, and that geotechnical studies are being performed after the fact. 2. Owners seek to shed geotechnical risks in DB projects: The surveys, case studies and content analysis have shown that the predominant approach towards the allocation of the geotechnical risk in DB projects is for the owner to allocate the risk to the design- builderr as much as possible. The only clear exception relates to contaminated soil, which owners tend to assume. 3. Some owners seek to limit the scope of the DSC Clause: The content analysis and case study interviews showed that some owners attempt to shed the risk by excluding
118 geotechnical/geological conditions from the differing site conditions clause and/or include statements indicating that the geotechnical studies performed by the owner are for reference only and do not constitute basis for a DSC claim. 4. Some DOTs have eliminated the DSC clause entirely: A DSC clause is not required for federal aid DB projects. This creates the opportunity for owners to eliminate the DSC clause if state law permits it. Without a DSC clause, the DB Contractor is potentially at risk for changed conditions. 5. The case law demonstrates that it is very difficult for the owner to effectively shed the DSC risk: The legal review performed in this research and for Synthesis 429 demonstrated that regardless of qualifying and exculpatory language, owners are not always able to effectively shed the risk of differing site conditions. 4.2 Perception of the Geotechnical Risk There is a disconnect between the DOTs desire to transfer the lionâs share of the geotechnical risk to the design-builder and the case law on the matter. The study found numerous examples of contractors prevailing on DSC claims and obtaining compensation despite the ownerâs best legal efforts to contractually transfer the risk. This led to the research team issuing an extra survey that measured the DB geotechnical perception of risk difference between owners and design-builders. The results of that analysis led to in the following findings: 1. The perceptions of geotechnical risks between owners (DOTs) and the construction industry are markedly different. The survey found that that experienced DB contractors perceive the geotechnical risks to be higher than experienced DOT geotechnical personnel. Tying back to the earlier finding that DOTs preferred approach is to attempt to shed risk, the finding is consistent with the idea that the
119 owner thinks it is allocating the geotechnical risks to the contractor in its DB RFP, causing the design-builders to perceive a higher level of risk 2. Previous research proved that higher levels of perceived risk result in inclusion of higher contingencies to cover that risk. When that thought is coupled with the case law finding that owners usually lose DSC claims, the notion that DOTs are actually paying to unsuccessfully shed geotechnical risk becomes logical. That logic leads to the idea that to reduce or eliminate this issue, if one could find a way to align the perceptions of both the owner and industry on a project-by-project basis, the geotechnical risk premium could potentially be reduced. 4.3 Strategies for Aligning the Perceived Geotechnical Risk Having identified the difference in perception of the geotechnical risks between the owner and design-builder, and the conflicting strategies of owners shedding the risks and design-builders claiming differing site conditions regardless of contractual wording; the need for aligning the perception of the geotechnical risk emerged as a point of focus for the research team during Phase 2. As a way to address those needs, five different strategies have been identified and are being proposed as part of this research project: 1. There is a need to align differences in perception of the geotechnical risk between owner and design-builder to avoid over- or under-estimating the risks by either party and reduce conflicts by effectively sharing the risk. Five strategies have been identified for that purpose: a. Implement early contractor design involvement through encouraging geotechnical ATCs during procurement.
120 b. Use DB process to address other geotechnical issues by involving third party stakeholders as early as practical in project development and delivery. c. Raise the visibility of geotechnical issues in DB projects to ensure competing contractor teams understand the level of criticality on each project. d. Avoid differing site conditions claims through enhanced contract mechanisms designed specifically for addressing geotechnical risks. e. Promote an atmosphere of life cycle-based design and construction decision- making with respect to geotechnical risk on DB projects. 4.4 Tools for Managing Geotechnical Risks By means of all the research instruments explained in this report, the research team has identified a set of tools that provide different approaches to manage the geotechnical risk in design-build projects. A set of tools has been identified as effective practices being implemented by DOTs across the nation, considering that there is no unified approach towards managing the geotechnical risk in DB projects, this compilation of tools is considered an emerging finding as it is made available for DOTs to implement and improve their practices as necessary. Table 4.1 shows a list of all the identified tools to manage geotechnical risks and their sources.
121 Table 4.1 List of Tools Tool Source Competitor designated boring locations UT+ Competitors permitted to conduct supplementary borings at own expense MN+ Contractor produced GBR-C OH Define no-go zones for geotechnical ATCs UT+ Include differing site conditions clause SC+ Include life cycle criteria in best value award scheme TX+ Multiple NTPs with one designated for geotechnical investigation, design, and a second specifically to commence excavations, utility work, etc. Literature Negotiated GBR interpretation WA+ Progressive DB MD Request of geotechnical ATCs CA+ Scope validation period VA Unit prices for contaminated material, over-excavation, etc. MT+ Validate proposed life cycle elements during design Literature Weight geotechnical evaluation criteria MI+ Collect potential contaminated material information during ROW acquisition Literature Contaminated material allowance MN+ Differing site conditions allowance WA+ Encourage life cycle related value engineering proposals from subcontractors Literature Flexible footprint for NEPA clearance MO Furnish GBR WA+ Geotechnical conditions database VA Include GBR-C provision WA+ Performance specifications for post-construction performance (subsidence, etc.) MN+ Provide a mechanism to conduct competing team requested additional borings, i.e. permits, rights of access, etc. FL+ Site conditions history from property owners during ROW acquisition Literature
122 4.5.Potential Solutions to Achieve an Aligned Approach to Geotechnical Risk The primary emerging finding of this research is that there is a need to achieve an aligned approach towards managing geotechnical risks in DB projects. The disconnect between owners and contractors as to who owns the geotechnical risk in DB projects creates an overestimation of the risks that lead to unnecessary contingencies as a measure of protection from overexposure. Therefore, the focus moving forward is to mitigate the geotechnical risks by encouraging collaboration between the parties in a DB contract. For that purpose, three emerging procurement practices are highlighted as potential solutions to the problem: 1. Progressive Design-Build (PDB): PDBâs attraction in the geotechnical risk management realm is the ability to negotiate the geotechnical risk after award and after the geotechnical investigation has been completed rather than depending on the DSC clause to allocate the subsurface risk. With PDB, the first design and construction package released for construction could be to commence the subsurface investigation and conduct selected excavation on the project site to identify where the geotechnical issues will be encountered and their magnitude. Thus, a fair and equitable amount for the realized subsurface risk can be established. This eliminates the need for adding unnecessary contingencies in the price, as the uncertainty of the subsurface conditions is eliminated early in the project. 2. Multiple Notices to Proceed (NTP): Similar to PDB, using multiple NTPs allows the owner to reduce the risk of differing site conditions by issuing an NTP only for contractorâs subsurface exploration and underground work before releasing the entire scope of work. This way, there is a prioritization in removing the uncertainty of the
123 subsurface conditions early on the project so any differing site condition is dealt with before advancing on the next stages of the project. 3. Scope Validation Period: By means of this contractual provision implemented by VDOT, the design-builder can, during the design development process, present claims that relate to deficiencies in owner-furnished information. The scope validation period, as implemented by the VDOT, is generally 120 days after contract award, although this can be adjusted for more complicated projects. After the end of the scope validation period, the design-builderâs claim rights are waived for items not previously raised. This approach allows for an early resolution of geotechnical- related issues and establishes a limit for the ownerâs liability by assigning a specific timeframe for differing site conditions claims. 4.6. Suggested Future Research and Implementation The study found very few significant gaps in the body of knowledge that would require future research to fill. This area is reasonably mature and as a result, future research is recommended in the area of implementing the effective practices identified in this report and validating their effectiveness across different types of projects, in different geographic areas, and under different sets of statutory/legislative constraints. The following are two potential research projects that will extend the findings of the NCHRP 24-44 work to enhance implementation in state DOTs. 1. Comparative evaluation of DB project performance outcomes of pilot projects delivered using PDB, multiple notices to proceed, and scope validation periods. The project would solicit interest from DOTs that have not used these three tools to implement them as pilot projects. The research would consist of a retrospective longitudinal study of each pilot project from inception to completion followed by a
124 cross-case analysis of the benefits, costs, and quality. This would be coupled by an analysis of a detailed record of geotechnical issue resolution kept during the pilot projectâs life cycle. The project would also include a requirement by the winning design-builder to disclose its rationale for all geotechnical/subsurface contingencies included in the bid price. The objective would be to not only compare the efficacy of the three approaches but also to identify those stages of the project development process which may be revised to result in a better geotechnical risk outcome. The result would be a measurement of how well DOT and design-builderâs geotechnical risk perceptions were aligned by implementing the three tools. 2. The second research recommendation is to develop guidelines for calculating the amount of contingency that would be required to cover geotechnical uncertainty in DB projects. The research would involve quantitative analysis of past DB price proposals submitted by all bidders and correlated with actual outcomes including DSC change orders, claims, etc. A classic Monte Carlo analysis of risk based on probability density functions developed from actual observed performance in the field may be one possible approach to develop an algorithm for this purpose. Multi- Attribute Utility Analysis might also provide a means to solve this problem.