Jurisdiction - Hong Kong
Hong Kong – Building From Uncertain Baselines.

25 June, 2014


Unforeseen ground conditions continue to be a major issue for all contractors working on infrastructure projects in Hong Kong. The challenges in this area have been gradually recognised by employers, including the Government and MTR, over the last decade. It is currently in vogue, particularly on MTR contracts, to attempt to instil “clarity” in this murky area through the use of Geotechnical Baseline Reports (‘GBR’) which are used to allocate the risk of unforeseen ground conditions.

The GBR is meant to provide clarity by providing stated geotechnical baselines derived from assessment of the ground investigation data available at the time of tender. Where a contractor’s claim is based on a parameter that is subject to a baseline – for example, the proportions of soil, rock and mixed ground in areas of bulk excavation – then the baselines are used as the basis for the engineer to assess what could reasonably be foreseen by an experienced contractor with the baselines being treated as the only available interpretations of ground investigation at the time of tender. Anything that could not reasonably be foreseen is treated as unforeseen ground conditions, and claimable by the contractor under the contract.

However, this approach leaves open the question “what would an experienced contractor have understood from the GBR at the time of tender?” This question is important because GBRs contain assumptions, margins for error, and sometimes unclear and confusing information. It also leaves open the related question “what else can the engineer take into account when assessing what could reasonably be foreseen by an experienced contractor at the time of tender?”, as the provisions relating to the use of the GBR require the engineer to only use it to “form the baseline” of his decision. The effect of these provisions is unclear, firstly, because of the confusing re-use of the term “baseline”, and secondly, because (according to principles of contractual interpretation) these provisions must be read in the context of the contract as a whole.


To provide an example of how these questions might arise on site, assume a contractor is to install piling works on site. Each pile has to be socketed into a rock-head to a certain specified depth at all points around its circumference. The relevant GBR (based on actual bore-log data) assumed a gently undulating theoretical rock profile connecting all the levels derived from the bore-logs, but states that the actual level of the rock-head may vary +/- 3m. When the contractor actually attempts to install the piles, it finds that, instead of the gentle rock profile there is something that resembles a mountain range, with extreme rises and troughs, all of which fall within the +/- 3m range.

Has the contractor encountered unforeseen ground conditions? The engineer may argue that no unforeseen ground conditions have been encountered, since the variations fall within the +/-3m range. The contractor may argue the rock profile is vastly different from the interpretation provided in the GBR (i.e. the smooth profile), and taking into account what the information was used for (i.e. the founding of piles to a certain depth within the rock-head), this must constitute unforeseen ground conditions.

As a matter of practicality, in the situation described above, extreme rises and troughs are much more difficult to deal with. As the contractor needs to ensure that each pile is socketed into a rock-head to a certain specified depth at all points around its circumference, it is highly likely that much greater quantities of rock will need to be removed to achieve this, and in conditions quite different than those brought about by a gently undulating profile. This may in turn give rise to issues of plant suitability and progress on site may be significantly slowed.

In a sense, this reveals the greater difficulty with the use of GBRs in the industry. GBRs were meant to increase clarity by providing one interpretation, but the way GBRs are currently prepared has created ambiguity regarding their own use and interpretation, and precisely how they allocate risk. This is further confounded by the fact that different approaches are taken to the preparation of baselines for different projects and the baselines are often not quantitative (for example, providing specific quantities or ranges of quantities of types of material to be excavated) but are instead qualitative (for example, providing depths/profiles or ranges of depths/profile at which different materials may be encountered). Where baselines are qualitative arguments will arise as to what the implications of them are for quantities and work which should have been allowed for at tender stage and how that has changed in the actual conditions.

The lack of clarity as to how GBRs are to be applied means that ground conditions remain a challenging issue to resolve on current projects. Contractors will have to take a variety of steps when they encounter ground conditions which may lead to a claim. This will involve collecting appropriate samples, maintaining pertinent records and (often) seeking expert geotechnical assistance. Where such evidence conflicts with the deemed assumptions made by the engineer preparing the GBR this will lead to further challenges as to how to use these GBRs and frame claims in respect of such conditions. Contractors will have to be pro-active in their approach to resolving such claims.


Pinsent Masons


For further information, please contact:


Vincent Connor, Partner, Pinsent Masons

James Lewis, Pinsent Masons


Pinsent Masons Construction & Real Estate Practice Profile in Hong Kong


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