As the popularity and use of Geotechnical Baseline Reports (GBRs) on tunnel projects grows, we often find ourselves being asked to provide a GBR for projects with little understanding by owners of what a GBR is and how it should be used. In this article, we answer the question that continues to surface when discussing tunneling projects with owners: What’s the deal with GBRs?
GBRs are becoming standard for tunnel projects around the United States yet are still somewhat of a mystery to many owners and engineers working on their first tunneling project. Even when a GBR is utilized on a project, there is often still confusion by owners regarding its purpose, use, incorporation into contract documents, and use in evaluating differing site conditions.
So, what is a GBR? A GBR is a contract document used to allocate risks posed by subsurface conditions between the contractor and the owner for civil tunneling projects. GBRs were originally developed to promote more uniform bids and to provide a way to expedite resolution of differing site conditions claims.
Generally speaking, the spectrum for risk-allocation is juxtaposed by owners who desire to shed all risk of differing site conditions to the contractor, and by owners who accept all risk of differing site conditions. In most cases, neither of these extremes is in the owner’s best interest.
The purpose of a GBR is threefold:
- Allow the design team a means to describe subsurface conditions that can positively or negatively impact both construction and construction cost
- Attract qualified and competent contractors by providing a basis for preparing a bid and secondly, for resolving disputes related to claims of differing site conditions
- Provide the owner with a contractual mechanism to manage geologic risk and the cost implications of that risk should it be realized during construction
In order to talk about GBRs, we must first talk about risk associated with underground construction. Risk is any event that will affect project goals if it does occur, with an emphasis on negative events with unwanted consequences. Risk is often described as the product of probability and consequence:
Risk = (Probability of Unwanted Event) x (Consequence of Unwanted Event)
Increasing either the probability or the consequence will increase the associated risk. Proactive risk management has become a necessity for underground construction where many construction variables are difficult to identify, classify or quantify. Effective risk management has been shown to help reduce cost overruns by acknowledging that risks are present and by equitably allocating risks. The figure below shows the benefits of risk management, particularly in the early stages of a project when costs to mitigate identified risks are the lowest.
On underground construction projects, the potential individual risks with significant impacts are exhausting. A comprehensive project risk register is commonly used to identify specific risks, their cost, implications, and potential mitigation alternatives. Risk registers are powerful tools if used properly and embraced by the owner, engineer, and contractor during both the project’s design and construction phases.
Developing a risk register should never be done in a vacuum. Effective risk registers are often developed during workshops that include key stakeholders, are updated and revised throughout the design process, and serve as a live document for the duration of design and construction. Generally, project risks fall into seven main categories:
- Third Party
Analysis of the identified risks allows a project-specific ranking and prioritization of those risks. The table below outlines a qualitative risk rating using both probability and consequence severity.
Once a Risk Register is developed, the project team can establish mitigation options that will minimize negative impacts on project success. The mitigation options typically fall into the following categories:
- Risk Avoidance: change the project plan or eliminate items to avoid the risk.
- Risk Mitigation/Minimization: reduce the probability of the event occurrence or reduce the severity of the event consequences.
- Risk Transfer: convert responsibility for risk, usually financial, to another party such as a contractor or insurance provider, through mechanisms such as contracts, insurance policies, securitizations, performance bonds, etc. The GBR is an integral part of the risk-transfer process.
- Risk Acceptance: acknowledge and prepare for risk occurrence.
GBR as a Risk-Sharing Tool
Above all, GBRs are a risk-sharing tool for geologic risks. For tunnel projects, the focus of construction on a single point (i.e. the tunnel face) makes the ground conditions encountered of critical importance. It is impractical to gain a complete understanding of how the ground will behave prior to construction. This is due to the inherent variability of subsurface conditions and limitations of geotechnical exploration.
Historically, owners have attempted to mitigate risks inherent in underground construction by pushing all risk to the contractor. In this approach, the contract documents include the geotechnical report as information only, and the contractor is required to make their own interpretation of both the ground conditions and anticipated ground behavior. Since the contractor makes its own interpretation of ground conditions, the owner’s assumption is that there is little basis for submitting change orders or making claims. However, the reality is that the contractor does not “accept” risk; the contractor does “price” risk. The more risk that is pushed from the owner to the contractor, the higher the bids are likely to be as the contractors add contingencies to cover the risk of unknown ground conditions. This often results in owners paying for risks that “may” occur, rather than only paying for risks that “do” occur. If ground conditions are more adverse than the contractor expected, the contractor is likely to file a claim for subsequent damages anyway. The owner, who attempted to place the risk of such conditions on the contractor, is usually unwilling to pay for the claimed differing site conditions, and costly litigation may ensue. The litigation battle is often stalled as interpretations of the ground conditions and anticipated risks are formulated by the owner post-construction rather than during design.
Another potential consequence of contractually allocating risk to the contractor is that the “low bidder” contractor is often the one who does not recognize the risks or who has not priced the risks appropriately. The low-bid contractor may find itself in financial difficulty and might then look for construction short-cuts or attempt to re-coup losses by submitting claims. Experience has shown that transferring risk to the contractor does not result in reduced project cost, claims, nor a smoother construction project.
On the other hand, the owner should not be required to accept all risks of unknown ground conditions. While the owner “owns” the ground, the contractor is responsible for exercising its expertise to determine how best to complete the project successfully. The GBR is the industry’s current “best practice” approach to addressing the unknowns in ground conditions. By clearly communicating the anticipated ground conditions and behaviors and providing an interpretation of how those conditions will affect construction, the risk can be fairly allocated between both parties. The owner, as the originator of the GBR, establishes the level of risk they are willing to accept. In theory, if a subsurface condition and/or ground behavior is encountered that is more adverse than dictated in the GBR, the owner will pay the contractor for the additional construction costs. The contractor has the opportunity and the contractual obligation to price the work based on the risks allocated in the GBR. Unless subsurface conditions and/or ground behavior are more severe than those dictated, the contractor has no basis for a claim.
The Difference Between GBRs and Geotechnical Data Reports (GDRs)
Geotechnical Data Report (GDR)
A Geotechnical Data Report (GDR) is a compilation of factual subsurface data collected during a project investigation. Data are collected during borehole drilling, laboratory testing, test pit excavation, geophysical survey, geologic mapping, literature review, and other means that provide quantitative or objective data about the subsurface. The GDR contains factual data only; to the extent possible, biases introduced by persons making the observations and collecting data are removed by conforming to applicable ASTM standards.
The GDR provides objective data that a GBR author uses to interpret subsurface conditions. For example, a GDR may include borehole logs that show a soil/bedrock contact at various elevations as encountered during drilling. Whereas, the GBR may include a subsurface profile that shows a line connecting the soil-bedrock contact between multiple boreholes. Interpolating the soil-bedrock contact between boreholes is an interpretation and may be influenced by the experience of the person making the interpretation. The GDR is also limited by what it does not include. For instance, a small diameter borehole is likely to miss scattered boulders. As a factual report, the GDR will not report boulders in the subsurface. The GBR, as an interpretive document, might state that boulders will be encountered based on the opinion and experience of the GBR authors in the project vicinity.
GBR Baseline Statements
The GBR provides information about the anticipated subsurface, discussion of similar nearby projects if available, and a section on feasible construction methods and the potential problems these methods may encounter during construction. However, the GBR’s “baseline statements” (“baselines”) make the document unique. The baselines are a set of contractual assumptions about ground conditions and behavior. It is important to understand that a baseline is not necessarily directly consistent with the data generated by the subsurface investigations, rather it provides a specific set of ground conditions that should be used by contractors to bid the project. If the actual ground conditions encountered during project construction are either the same as, or more favorable than, the baselines, it is the contractor’s responsibility to execute project construction at no additional cost to the owner. If the actual ground conditions encountered during construction are more adverse than the baselines, it is the owner’s responsibility to reimburse the contractor for the negative financial impacts resulting from those conditions. It can be helpful to think of a baseline as a “line in the sand” as depicted below.
Baselines should provide the contractor with information necessary to bid and construct the project, while still allowing the contractor the freedom to choose viable means and methods. The following are examples of items that should be addressed by the baselines:
- What type of ground will be encountered?
- Where will different types of ground exist?
- How will the ground behave?
- Will the ground behavior change over time?
- Will groundwater be encountered? Where? How much?
- Will there be obstructions that will impact tunnel advance?
- Are there third-party considerations not covered in the specifications that will affect construction?
Baselines should be clear and concise, leaving no room for interpretation. A baseline should be quantitative and allow all parties to readily identify on which side of the “line in the sand” an actual condition falls. Some examples of poor and improved baseline statements are presented below.
Often, it is prudent to set a baseline at a level not consistent with the GDR based on knowledge about the geologic environment from other projects in the area or to be consistent with the owner’s desired risk-sharing strategy for the project. Some owners may be willing to accept more risk and therefore set baselines that are more optimistic than directly indicated by the project subsurface information.
Conversely, some owners may wish to minimize the potential for contractor claims for unanticipated ground conditions and therefore set baselines at the conservative upper edge of the identified project subsurface information. However, it is important that the baselines fall within a reasonable value with respect to the anticipated subsurface conditions to avoid the contractor ignoring baselines perceived as unreasonable; the position of unreasonable baselines has been upheld in the contractor’s favor in prior court cases.
The Differing Site Condition (DSC) Clause
The GBR is the primary document that defines the ground conditions upon which the contractor and owner should consult when determining the validity of a DSC. For the GBR to be effective, a DSC clause must be included in the contract documents. This gives the owner and the contractor the legal means of identifying when changes in the ground conditions should warrant compensation. Standard DSC language includes two types of DSCs: Type 1 – ground conditions that are materially different than those presented in the contract documents, and Type 2 – ground conditions that are of an unusual nature and differ materially from those normally anticipated by a reasonable, intelligent and experienced contractor in a similar area or conditions. Along with the DSC clause is a section that formally instructs the contractor that they may rely on the GBR as data to be use/d during bidding and throughout the work.
The Deal with GBRs
GBRs are becoming the standard of practice for tunnel and trenchless projects in the United States and are powerful tools for controlling and allocating risk, leveling the playing field for contractors bidding the work, and drawing lines in the sand with respect to DSCs. The key to successful implementation of a GBR is owner education and incorporation into the GBR process, not only during design but during construction. A properly written GBR can save an owner money by reducing potential litigation costs and claims, and by providing contractors with critical information and interpretations necessary in developing a competitive bid for the project.
Robin Dornfest, PG, CPG, President, Lithos Engineering
Nate Soule, PE, PG, Vice President, Lithos Engineering
Ryan Marsters, PE, PG, Associate, Lithos Engineering