A commercial general contractor is hired for a project under a lump-sum contract. During the excavation phase, unforeseen subsurface rock formations are encountered, requiring extensive blasting and removal not specified in the original contract documents. The contract includes a 'Differing Site Conditions' clause. What is the MOST appropriate action for the contractor to take?
- AProceed with the work and submit a claim for extra payment at the end of the project.
- BStop all work until the owner independently discovers the issue and provides new instructions.
- CAbsorb the additional costs, as lump-sum contracts place all risk on the contractor.
- DImmediately notify the owner and/or architect in writing and request a change order for the additional work.
Show answer & explanationAnswer & explanation
Correct answer: D. Immediately notify the owner and/or architect in writing and request a change order for the additional work.
A Differing Site Conditions clause protects both the owner and contractor. Upon encountering unforeseen conditions, the contractor is contractually obligated to provide immediate written notice. This allows the owner to investigate and negotiate a change order for the additional work and associated costs, rather than the contractor absorbing the costs or waiting until project completion.
Why the other options are wrong
- A. Delaying the claim until the end of the project often complicates resolution and may violate contract notification requirements.
- B. Stopping work without proper notification and instruction can lead to breach of contract and further delays, potentially making the contractor liable.
- C. The 'Differing Site Conditions' clause specifically mitigates this risk for the contractor in lump-sum contracts.
Differing Site Conditions (DSC) Clause
A contractual provision that allows a contractor to seek additional compensation or time if unforeseen physical conditions are encountered at the job site that differ materially from those indicated in the contract or normally encountered.
- Protects contractors from unknown subsurface risks.
- Requires prompt written notification to the owner/architect.
- Prevents contractors from inflating bids to cover unknown risks.
Memory trick: When the ground surprises you, write it down and tell the owner immediately.