By Peter Kenyon, February 4, 2015
An Alaskan Way Dispute Review Board (DRB) ruling that differing site conditions (DSCs) were encountered during construction of the TBM launch pit clears the way for a claim of up to US$20 million in compensation for the SR99 tunnel design-build contractor, Seattle Tunnel Partners (STP). So far a total of US$162 million in claims has been referred to the DRB for adjudication, with another US$48 million under review by the project owner, WSDOT.
Under the terms of its design-build contract with WSDOT, STP is entitled to make claims for compensation for extra or remedial work that lies outside the scope of the original contract, and which arises from differing site conditions to those outlined in the owner-supplied Geotechnical Baseline Report (GBR) upon which original bid proposals were made prior to award of contract in January 2011.
The DRB made recommendations on two matters brought before it by STP, both of which relate to complications that arose during construction of the TBM launch pit at the south portal. The potential $20 million claim went in favor of STP; while a separate $5.5 million claim relating to necessary reinforcement work to the viaduct in the vicinity of the launch pit excavations went in favor of WSDOT.
The $20 million figure, at this stage, remains a ceiling value on possible compensation for this particular item. In the conclusion to its 15 January (2015) report, the DRB said: “[We] consider that a DSC was encountered in the glacial soils and that STP is entitled to relief as it pertains to the impacts on dewatering of these soils within this southern area [of the TBM launch pit footprint]. The DRB, however, is not sufficiently knowledgeable at this time on the 25 particulars of what efforts were expended, as compared to what was planned, to accomplish the necessary dewatering of these soils to provide much in the way of guidelines on what compensation in time or cost that STP is entitled to. As noted earlier in the referral of this dispute to the DRB, issues related to the time and money impacts of the alleged DSC are outside the scope of this hearing.”
Briefly, the $20 million claim relates to whether the presence of water-bearing sands and gravels (so-called ESU 5 soils) in the footprint of the TBM launch pit constituted a site condition different to that outlined in the owner’s GBR. In countering the claim WSDOT took three positions; first, that because the pit was excavated in a different location to that originally outlined in the owner’s concept design, the GBR could not be applicable to the new location, and that therefore no DSC could exist.
This defensive position was taken by WSDOT despite the fact that the Alternative Technical Concepts (ATC2 and ATC 5) that it accepted as part of STP’s successful bid proposal resulted in significant savings to the bid price. Second, WSDOT took the position that “the presence of sand within the ESU 4 and ESU 7 units in the launch pit [did] not constitute a DSC because the GBR disclose[d] the presence of layers and lenses of cohesionless sand within the ESU 4 and ESU 7 soils”; and third, that STP, by delaying its claim by nearly two years, had not provided “timely notice” of a potential DSC and had therefore by default waived its right to compensation.
The DRB review processThe Dispute Review Board (DRB) is a panel of three experienced and impartial reviewers organized before construction begins. Under the terms of the Alaskan Way contract STP and WSDOT agreed in advance on the board’s three constituent members from a total of eight candidates put forward for the role, four each. Mutual agreement was also reached upon who should be Chairman.
DBRF Practices and Procedures Manual that guides the process.
Although the recommendations of the DRB are not binding on either party, the Alaskan Way contract follows DRBF guidelines stating that the language used should make it clear that the board’s findings are to be included in any subsequent litigation between the disputing parties. The relevant clause in the Alaskan Way contract (Section 24.2.4 (e)) states: “In the event the DRB’s recommendations do not lead to resolution of the dispute, all DRB records and written recommendations, including any minority reports, will be admissible as evidence in any subsequent arbitration or litigation.”
WSDOT refused to supply TunnelTalk with a detailed breakdown of the nature and value of the individual disputes that are due to be presented to the DRB in the coming weeks and months, but a Public Record Request has been lodged for disclosure of this information.
Regarding WSDOT’s assertion that STP’s claim was not “timely”, the DRB disagreed – thereby supporting the STP “proof of the pudding is in the eating” position that until dewatering operations actually started in October 2012 there had been insufficient information upon which to make a concrete DSC claim any earlier.
The DRB panelistsThe Chairman of the Alaskan Way panel is Daniel F. Meyer, a past President of the DBRF and a serving member of its board of directors. He has sat on 70 DRBs for a total value of associated projects of US$15 billion, including both design-build and design-bid-build projects. His experience encompasses rail and mass transit; subways and light rail; heavy cut and cover structures; underground work including tunnels and shafts; and foundation work including piling, caissons and slurry walls.
The other panel members are Russell Clough, who as of 2013 had sat on 64 DRBs, 27 as Chairman; and Peter Douglass, a former DRBF President (2006-7) who has sat on 40 DRBs on major tunneling projects throughout the USA and Canada. Douglass is a former winner of the Foundation’s annual Al Mathews award that recognizes exemplary service in advancing the DRB concept and the DBRF; and is one of the four authors of the organization’s Practices and Procedures Manual. He is a registered engineer and engineering geologist with advanced degrees in both geology and civil engineering and has spent the last 35 years of his career working primarily on underground tunnel projects in soil and rock.
The recommendations of the DRB as to whether a DSC has been proven, and therefore whether contractual liability for extra compensation payment exists, is not legally binding. WSDOT is now considering its position in relation to the potential $20 million claim. A spokesman said: “As we review the board’s recommendations on the differing site condition in the launch pit and determine our next steps, we will use the terms in the contract to reach the best possible outcome for taxpayers as we continue to build this critical safety project. We will not be offering our opinions of the board’s recommendations or speculating on next steps until our analysis is complete.”
This is just the start of what will be lengthy disputes before the DRB. So far compensation claims totaling $210 million have been lodged by the contractor joint venture, of which $162 million has been rejected by WSDOT and will be referred to the DRB. The outstanding $48 million is under review by WSDOT. The review board is to meet in March to consider the largest claims: those related to the circumstances in which the TBM suffered main bearing seal failure.
(Video: Addressing the Bertha bearing seal issues. https://www.youtube.com/watch?v=GYmpBNZcXhY )
However, it is unlikely that the $40 million DSC contingency fund will be anywhere near large enough if STP is able to substantiate what is almost certain to be its largest claim – that the known existence in the ground of old steel pipework contributed to the TBM breakdown, and that such knowledge was not transmitted to the contractor by WSDOT.
Once STP and its TBM manufacturer, Hitachi-Zosen, are able to access and inspect the bearing assembly the exact cause of the breakdown is likely to become clearer, but whatever the outcome hundreds of millions of dollars in extra costs are potentially at stake. The contractor does, however, have some redress against Hitachi-Zosen should its DSC claim against WSDOT fail, and for the moment at least the manufacturer is bearing the costs related to repair of the $80 million machine under the terms of its staggered payment contract with STP which stipulates that the machine is not fully accepted until it successfully reaches 200 rings (1,300ft). It is currently 50 rings short of this.
At this stage it is remains uncertain who will pick up the tab for hiring a third party contractor to excavate the 120ft x 80ft recovery shaft; lifting the cutterhead with specialist equipment; dismantling the main bearing assembly and replacing it with a new one; reinforcing the cutterhead for greater rigidity; and reassembling and testing the machine; not to mention the potentially huge financial penalties associated with late contract delivery. For every day beyond a November 13, 2016, completion date STP is contractually obliged to pay $100,000 in compensation on a project that it pledged to complete by December 31 this year (2015) in its successful bid proposal.
- Launch Pit DSC Dispute Report, DRB Recommendation Jan 15, 2015
- WSDOT Alaskan Way design-build contract
- DBRF Practices and Procedures Manual
- Seattle TBM recovery shaft repair row – TunnelTalk, January 2015
- STP-WSDOT clashes threaten Seattle project – TunnelTalk, March 2014
- Alaskan Way contract signed – TunnelTalk, January 2011
- Discussing Seattle TBM repair strategy – TunnelTalk podcast, Jul 2014
- Bertha bearing to get 86-tonne reinforcement – TunnelTalk, Jun 2014
- TBM Bertha repairs strategy – TunnelCast, Apr 2014
- Twelve month repair job for TBM Bertha – TunnelCast, Apr 2014
- Addressing the Bertha bearing seal issues – TunnelTalk, Feb 2014
- TBM Bertha suffers bearing seal failure – TunnelTalk, Feb 2014
- Hyperbaric inspections begin in Seattle – TunnelTalk, Jan 2014
- Investigating the Seattle mega-TBM stoppage – TunnelTalk, Jan 2014
- Dewatering to help deal with stuck Bertha – TunnelTalk, Dec 2013