STP wins latest round of Seattle DRB claims 4 Feb 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 change order claims have been referred to the DRB for adjudication, with another US$48 million under review by the project owner, WSDOT.

Seattle Alaskan Way TBM launch pit

In the first of what are likely to be many judgments over the coming months, the DRB accepts a DSC claim initially lodged with the owner in November 2012 by the Dragados/Tutor Perini construction joint venture; and rejects the counter claim by the project owner, the Washington State Department of Transportation (WSDOT), that no DSC existed. Both parties referred the unresolved matter to the DRB in September 2014 after failing to reach agreement between themselves.

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. It does this by making change order requests, which are referred to the DRB for a non-binding decision in the event that WSDOT decides not to accept the claim in the first instance.

So far the DRB has 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 latest potential $20 million claim went in favor of STP; while a separate and earlier $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.

TBM Bertha ready to start tunneling

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.

Secant piles clearly visible in the SR99 launch pit

With regard to WSDOT’s claim that the presence of cohesionless water-bearing sands was implied (if not explicitly stated) in its GBR, and that as such no DSC could exist in relation to the additional dewatering costs incurred as a result of excavating a deeper launch pit than had originally been intended, the DRB found in favor of the owner in relation to the saturated “upper soils above the glacial boundary” (which were “highly variable and normally consolidated, as pointed out in the GBR”). However, in the glacial soils themselves the DRB judged that a DSC did exist; and, furthermore that WSDOT’s defensive strategy in this regard made a mockery of GBR profiling and the whole intent of the GBR approach.

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 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 change order requests totaling $210 million have been lodged by the contractor joint venture, of which $162 million worth 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.

TBM Bertha’s trailing gear in the launch pit

The Alaskan Way Viaduct Replacement design-build contract is structured to provide a contingency fund of up to $40 million that the contractor can claim from if it can prove that differing site conditions have contributed to the incurring of additional costs. However, in the event of construction difficulties being experienced, this provision is slewed against STP since under the terms of the contract 75% of what remains in the fund at completion is payable to the contractor as an “incentive” payment. In other words, if the contractor were to successfully make $40 million worth of DSC claims against the fund it would effectively be “losing” its entitlement to $30 million worth of “incentive”, while the owner would be “losing” only $10 million since a no-DSC claim position at the end of construction would “cost” the owner (WSDOT) $30 million in incentive payments anyway.

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.

Discussing Bertha’s bearing seal issues

Dispute likely over cost of excavating TBM recovery shaft

This allegation is hotly contested by WSDOT, which claims that there are multiple references to TW-2 - the well in question - in project documentation supplied to STP, specifically the Geotechnical Data Report (GDR). In fact, it is not yet even confirmed whether such an obstruction played any material part in causing Bertha’s ruptured bearing seal and possible (though as yet undetermined) damage to the main bearing itself.

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.