Differing Site Conditions – How Risk Is Changing

The Differing Site Conditions clause is one of the oldest clauses used in construction contracts, having been created by the U.S. Federal government in 1926. It is generally accepted that the object of the clause is to transfer the risk of latent site conditions to the owner, thus enticing contractors to reduce their contingency cost at the time of the bid. The promise of the clause is that if the contractor encounters a “materially different” condition during the execution of the work, the owner will compensate the contractor for the resulting cost and/or time. For more than 90 years this standard clause has been used widely in both public and private contracts. Most practitioners in the construction industry think they know what the clause means and how it operates. But, in the words of one of the mid-20th century “deans” of construction law, Max E. Greenberg, “It ain’t necessarily so!” Over the years, the Courts and Boards of Contract Appeals have been slowing changing the interpretation of risk allocation under the clause.  A series of Court and Board cases have increased the contractor’s risk concerning differing site conditions. This webinar by expert speaker James G. Zack, Jr. will explore the changes in risk allocation.

Webinar Objectives

Webinar attendees will: 

• Learn about the intent of the Differing Site Conditions clause and how it operates.
• Learn what conditions are and are not covered by the Differing Site Conditions clause.
• Understand what must be demonstrated to prevail on a differing site condition claim and what contractual requirements must be complied with in full.
• Become familiar with several Court and Board of Contract Appeal decisions that are changing the “traditional” allocation of risk under the Differing Site Conditions clause.

Webinar Agenda

• Introduction
• Definition of Differing Site Condition (DSC)
• Why owners need a DSC clause
• History of the DSC clause
• Modern DSC clauses
• Conditions typically covered by DSC clauses
• What are “indications”
• What is a “material difference”
• Impact of contract disclaimers
• Conditions not covered by DSC clauses
• Conditions sometimes covered by DSC clauses
• Roadmap for successful DSC claims – 6 essentials
• 5 additional contract requirements
• Contractor’s duty to proceed with work
• Reverse DSC claims
• Caging risk allocation under DSC clauses
• Practical recommendations for owners
• Practical recommendations for contractors
• Conclusion
• Questions & discussion

Webinar Highlights

• This webinar discusses the definition of a differing site condition and why there is a need for a Differing Site Conditions clause in a construction contract.  
• The webinar sets forth the history and purpose of the clause and examines the modern Differing Site Conditions clauses.
• Discussion of the terms “indications” and “material difference” as well as an overview of the impact of contract disclaimers related to differing site conditions are covered.  
• The webinar explores what conditions are generally not covered by the clause and conditions that are sometimes included within the scope of the clause.  
• This webinar goes on to list the six-part test for a successful differing site condition claim and five additional contractual requirements contractors must comply with in order to prevail.  The contractor’s duty to continue work is also examined.  
• A brief discussion of the “reverse differing site condition claim” – an owner claims that may be asserted against the contractor seeking recovery of funds from the contractor when they encounter conditions “materially better than anticipated”.  
• An alternative use for the Differing Site Condition clause is also presented.
• The webinar explores several Court and Board of Contract Appeal decisions that appear to be slowly eroding the traditional risk allocation commonly accepted under the Differing Site Conditions clause, along with lessons learned from each case.  
• Finally, this webinar provides a list of practical recommendations for both owners and contractors dealing with the risks of differing site conditions.

Who Should Attend?

• Owners & Contractor Project Managers
• Resident Engineers & Architects
• Agency Construction Managers
• Construction Managers@Risk
• Design Managers
• Legal Counsel representing project participants