A return to Fairness in Ground Risk Allocation- The New SEMINARIUM - - PowerPoint PPT Presentation

A return to Fairness in Ground Risk Allocation- The New FIDIC/ITA Emerald Book. Standard Form of Contract for Tunnels and Underground Works

SEMINARIUM / SEMINAR CHALLENGES OF MODERN TUNNELLING SEMINARIUM / SEMINAR CHALLENGES OF MODERN TUNNELLING

WYZWANIA NOWOCZESNEGO TUNELOWANIA

September, 2019 Andrés Marulanda E. andres@ingetec.com.co

• Geotechnical uncertainty stems from:
• 1. Subsurface Risks (geotechnical risks) amplified in

Tunnels.

• Inadequate knowledge of geological conditions.
• Ground response often difficult to predict.
• Complex ground-structure interaction.
• Most structures foundation often main source of uncertainty. In tunnels the

ground is the main construction material.

• Lineal nature and extent of tunnels makes characterizing the ground costly and

difficult.

• Most activities in the critical path. Difficult to introduce additional excavation

fronts.

RISKY NATURE OF UNDERGROUND WORKS

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Underground construction projects demand special contractual considerations Difficulty of predicting ground behavior and unforeseen conditions imply an inherit uncertainty for tunneling projects Allocation of underground risks among the stakeholders becomes critical in underground construction NEW FIDIC EMERALD BOOK

TG 10

• 3. Almost Five Years in the Making!
• Started in Geneva. September 2014.
• 18 meetings.
• Published in Naples May 2019.

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SELECTING THE PROCUREMENT STRATEGY

FIDIC suit of contracts for procurement alternatives:

Traditional (Design-Bid-Build, DBB) Design-Build (Engineer-Procure-Construction EPC) Turnkey Contract: Not suitable for tunneling projects=> risk shifted completely to contractor

• 1. Who

develops detail design?

• 2. Mode of

payment to the Contractor

• 4. Ground Related Risk Allocation Under Previous FIDIC Contracts

1. The owner bears the risk of physical conditions which could not have been reasonably foreseeable by an experienced contractor at the date of tender. (clause 4.12). 2. Owner required to provide all relevant data it has on subsurface conditions. 3. Contractor obliged to inspect site and procure necessary info that might affect works (clause 4.10). 4. Red and yellow books allow for time extension and additional costs if physical conditions are not reasonably foreseeable. 5. Risk distribution philosophy=> employer owns ground risk. 6. Practical difficulty interpreting boundary of ground risk allocation and establishing what is “reasonably foreseeable”. Also no clear definition of how to recognize extra cost and time. 7. This often leads to claims and disputes.

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• 5. Based on Yellow Book 2017 Version

• 6. Background principles Emerald Book

ØFair Allocation of risk

• The ground and groundwater related risks should be assigned to the owner;
• The performance related risk for the expected ground conditions should be

assigned to the Contractor. ØInclusion of a contractual geotechnical baseline

• Sets the contractual limits of the conditions anticipated to be encountered

during construction. ØDisclosure of all available information

• Geological and Geotechnical information should be shared during the

tendering stage.

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• 6. Background principles
• Inclusion of a contractual unforeseeable physical

conditions clause.

• Implementation of a ground classification system that

properly reflect the effort for excavation and stabilization.

• Time adjustment according to ground conditions

should be regulated by the contract.

• A flexible mechanism for remuneration according to

ground conditions, foreseen and unforeseen, should be implemented.

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• 6. Background principles

Ø Strengthening

• f

the position, authority and requirements

• f

the Engineer. Both the Employer and the Contractor need an experienced and capable Engineer to ensure a correct application of the Contract, provide registrations and make the necessary determinations in due time. Ø Management of the project-related risks through effective tools. Ø Alternative Dispute Avoidance and Resolution. Conventional methods of dispute resolution (through arbitration tribunals and courts) do not satisfy the need of timely adjudication. Standing Dispute Avoidance and Adjudication Boards have proved to be useful to all parties and to the projects.

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• 6. Setting the Baseline

To set the allocation of subsurface risk in the contract documents, a Geotechnical Baseline Report (GBR) is used:

• GBR must be a part of the contract.
• GBR shall contain the Employer’s proposal for excavation and

lining works methods.

• Anticipated quantities of Excavation and Lining in the GBR

shall be itemized in one or more Baseline Schedules.

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• 7. Geotechnical Baseline Report

ØThe Geotechnical Baseline Report describes the subsurface physical conditions to serve as a basis for the execution of the Excavation and Lining Works, including design and construction methods, and the reaction of the ground to such methods. ØThe GBR sets out the allocation of the risk between the Parties for subsurface physical conditions. ØThe Geotechnical Baseline Report (GBR) single source contractual document that describes the anticipated subsurface conditions to be encountered during the execution of the Works. ØThe Contractor shall be entitled to rely on the anticipated sub-surface conditions set out in the Geotechnical Baseline Report

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• 7. Geotechnical Baseline Report

ØOnly contractual definition of the foreseeable subsurface physical conditions for the Underground Works and serves as the basis for the preparation of the Tender and execution of the Works. ØThe GBR also serves to convey and highlight the key project constraints and requirements, to enable the tenderers to grasp key project issues. ØAnticipated quantities of Excavation and Lining in the GBR shall be itemized in one or more Baseline Schedules.

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Ø What is in the GBR is foreseen Ø What is not in the GBR is unforeseen

• 8. Setting the baseline
• The Schedule of Baselines sets out the anticipated activities or items of work for the Excavation and Lining

Works and their corresponding quantities consistent with the conditions described in the GBR

• The production rates or durations entered by the Contractor against each activity or item of work are deemed

to allow for the time the Contractor requires to complete that activity or item of work

• The contractual time and cost for Excavation shall be adjusted according to the amounts and production rates

stated in the Baseline Schedules.

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• 9. Cost structure to facilitate remeasurement
• Cost items associated with ground conditions, such as the underground excavation, support and lining

should be regularly remeasured depending on the actual conditions encountered in comparison to the anticipated ones in the GBR.

• All other works shall be handled in the lump sum component of the contract price.
• Major portion of costs incurred by Contractors relates to time rather than quantities produced.

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The Contract documents shall consequently provide for time-related items which allow for corresponding adjustments in the Contract Price according to the adjustments in Time for Completion

• 10. Adjustment of time for completion
• The time available to the Contractor for the Underground Excavation and Lining stages shall be

f(DExpected sub-surface physical conditions expected (quantified in the Baseline Schedule) Vs subsurface physical conditions actually encountered)

• No adjustment shall be provided for any difference between production rates stated in Contractor’s

proposal and actually achieved, for the specified set of sub-surface physical conditions.

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Sub-surface physical conditions Employer RISK Production rates Contractor RISK

• 11. Adjustment of Time in Practice
• Consider a 1000m long tunnel with the

following characteristics:

• Total time for completion = 550 days

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Characteristic Section A Section B Length [m] 500 500 Advance rate [m/day] 10 1 Time for completion [days] 50 500

Figure 1 – Base Scenario. Bid with Ground Conditions as per anticipated in the GBR.

• 11. Adjustment of Time in Practice
• Scenario 1 - Encountered conditions are better

than foreseen in the Baseline Schedule:

• Reduce Time for Completion.
• More

favorable conditions allow the Contractor to advance according to his proposed rate for better ground.

• Encountered length:
• Section A = 600m
• Section B = 400m
• Total time for completion = 460 days

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Figure 2 – Scenario 1. Encountered ground conditions better than anticipated.

• 11. Adjustment of Time in Practice
• Scenario 2a - Encountered conditions are

worse than foreseen in the Baseline Schedule:

• Extend Time for Completion.
• Contractor should be compensated in

time and cost.

• Encountered length:
• Section A = 400m
• Section B = 600m
• Total time for completion = 660 days.

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Figure 3 – Scenario 2a. Encountered ground conditions worse than anticipated.

• 11. Adjustment of Time in Practice
• Scenario 2b - Encountered conditions are

worse than foreseen in the Baseline Schedule but the Contractor performed with faster advance rates than offered:

• Contractor would perceive a gain.
• Employer should recognize the extra cost

and time.

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Figure 3 – Scenario 2b. Encountered ground conditions worse than anticipated, but contractor advances with higher rates.

• 12. Conclusions
• The Emerald Book, the new FIDIC Standard Form of Contract developed for Underground Works, was

prepared following a balanced risk allocation approach:

• The Employer retains the ground related risk.
• The Contractor is responsible for the performance related risk.
• The contract uses a Geotechnical Baseline Report (GBR) to set out the sub-surface conditions

anticipated.

• GBR states the allocation of the risks contemplated for sub-surface conditions between the Parties.

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• 12. Conclusions
• If the encountered ground conditions vary within those set forth in the GBR, there will be an influence
• n time and cost for the Excavation and Lining Works.
• The Emerald Book contemplates that the Contractual Time for Completion should be adjusted (to the

extent that the critical path is affected).

• If ground conditions differ from those specified in the GBR, they shall be considered “Unforeseeable

Physical Conditions” and sub-clause 4.12 of the Emerald Book shall apply.

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