Impact of differing site conditions on construction projects

Abstract

The construction industry plays a very important role in the economy of any country. One of the major risks faced by construction projects is connected with the physical obstructions or changed conditions encountered during the execution of those projects. A condition that a contractor experiences on the site that differs materially from any of the conditions indicated in the contract he has entered into with the owner of the project or from what can be normally expected on the site is called a Differing Site Condition (DSC). The clauses that are commonly used in construction contracts in Sri Lanka when referring to DSCs are based on the FIDIC Conditions of Contract and ICTAD Standard Bidding Documents (SBDs). DSCs can lead to project delays and cost overruns in projects because they would have been unexpected and unforeseeable by the contractor at the time of bidding. Hence, this research was aimed at identifying the impact of DSCs on construction projects in Sri Lanka and the strategies that will be used to better manage those impacts. To achieve this aim, an extensive literature review was first carried out. Thereafter, ten (10) expert interviews were conducted to validate the relevance of the identified information to Sri Lanka. Commercial software was used to analyze the expert interview findings. Findings refined by the expert interviews were subsequently included in the questionnaire survey which had a response rate of 74% with 69 out of 93 responding. Relative importance index and descriptive statistics were used to analyze the data gathered through the questionnaire survey. The impact of DSCs on project cost is found to be average, whereas their impact on project duration is found to be high. The research also identified the impact of DSCs on construction projects based on their contract type, resulting impact of DSCs on traditional lump sum contracts being higher than that on either design and build contracts or traditional measure and pay contracts. The most significant cost and time related factors associated with DSCs and the strategies most suitable to manage the effects of DSCs were identified by analyzing the questionnaire survey findings. Cost to work through the DSC encountered was ranked as the most significant cost related factor out of the six factors identified, whereas Time delay due to stop of work at the site until further decisions are made was placed as the most significant time related factor out of the seven factors identified. The most suitable strategy that was identified is to get the parties to the contract to refer to all the documents related to site conditions. The research also recommends several other strategies identified according to their levels of significance.