The Obstruction Under the Basement
The redevelopment of a 1978 composite building in Cheung Sha Wan comprises a 28-storey residential tower over a three-level podium and a two-level basement on a site of 1,850 m². The contract is lump sum with quantities on the HKIA/HKIS Standard Form, value HK$612 million, 30 months. Ground investigation comprised four boreholes to 45 m; rockhead was recorded below 38 m in all of them. During basement excavation at −9 m the contractor exposed a 1.8 m thick mass-concrete raft and 600 mm diameter steel-cased piles from the site's pre-war predecessor. The obstructions cover about 25% of the basement footprint and appear on no drawing. The contractor stopped work, gave notice 41 days later (the contract requires notice within 28 days of the event) and claims 41 days and HK$23 million. It also claims 12 further days because its tower crane was out of service for repair in the same month. The client says a competent contractor in an old district should have priced for this, and instructs you to reject the claim outright and to consider shifting the tower 4 m north to avoid the obstruction.
1. The client instructs you to reject the contractor's claim outright. How should the architect characterise the obstruction, and what is the effect of the 41-day notice? Set out the contractual route you would take.
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Start with the contract text, not with fairness. Under the HKIA/HKIS private lump-sum form there is generally no differing-site-conditions mechanism: the contractor is deemed to have inspected the site and satisfied itself about ground conditions, and any pre-contract ground investigation report is normally supplied for information only, without warranty of accuracy. Government forms are different and usually contain a physical-conditions clause with its own notice, record-keeping and valuation machinery. The first question is therefore which regime applies. If there is no such clause, the obstruction is prima facie the contractor's risk and the claim fails as a claim.
That is not the end of it. Three routes remain. First, notice: a 28-day notice provision may or may not be a condition precedent. Read the exact wording - 'within 28 days, failing which the contractor shall have no entitlement' is a condition precedent; 'as soon as practicable' is not. If it is a condition precedent, determine no entitlement, but give reasons based on the facts rather than a bare rejection. Second, the employer can always instruct a variation - omit the affected basement area, or shift the tower - and once it does, removal of the obstruction becomes part of the varied work and is valued under the variation provisions, with an extension of time to match. Third, if the employer supplied the investigation data with an express warranty, or withheld information it knew to be wrong, there may be a separate misrepresentation route; alert the client and the professional indemnity insurer rather than bury it.
A reasoned written determination is essential, because it will be tested in arbitration or litigation and the architect is accountable for it.
2. Assess the time entitlement: 41 days for the obstruction plus 12 days for the tower crane. Explain how concurrency and the notice issue affect both time and money.
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Time and money must be analysed separately, and the contractor's global figure should not be accepted as a package.
On the 41 days: even assuming entitlement, the contractor must show that the obstruction actually delayed completion of the whole works. If the basement was not on the critical path during that period, or the contract programme contained float, the extension is nil or less than 41 days. Ask for a proper delay analysis - as-planned versus as-built, or time impact on the accepted programme - tied to dated site records, not a narrative.
On the 12 crane days: a crane breakdown is the contractor's own plant and resource risk, and normally gives no extension at all. The only qualification is if the contract contains an employer-risk event that caused the breakdown, which on these facts it does not.
Concurrency matters where the crane outage overlaps the obstruction period. If the two delays run in parallel, the architect must ask what the contract says about concurrent delay. Many forms give time but not prolongation cost for a period of concurrent contractor delay; others give nothing. Determine accordingly, and state the basis.
On money: even a valid extension does not automatically produce the claimed HK$23 million. Prolongation is assessed on the contract's valuation rules - time-related preliminaries actually incurred and not saved, with the contractor's mitigation duty applied. Additional work is measured or valued at rates or dayworks.
Finally, request further particulars without writing anything that could be read as a waiver of the notice point; asking for information is not accepting the claim.
3. The client wants to backfill the basement and shift the tower 4 m north to save six weeks. What should the architect advise, technically and statutorily?
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Advise that the six weeks saved on site is likely to be lost several times over in approvals, and that backfilling before a decision is irreversible and risky.
Statutorily, the shift is a change to approved building works. Amended foundation and site formation plans must be submitted and approved, and consent to commence obtained, before the varied works are carried out; proceeding on the original approval would render the built work unauthorised and expose the project to the Buildings Department's removal powers. Check the lease: a shift may affect the building covenant, the permitted building line, setback and street widening requirements, and any lease modification or consent needed from the Lands Department. If the site is within an Outline Zoning Plan, check whether the shift affects any approved planning permission, building separation or setback assumptions. Re-check means of escape, fire vehicle access, and the relationship with the neighbouring foundation and party structures - 4 m north may solve one problem and create a pile conflict with the adjoining site.
Commercially, the omitted obstruction removal is a variation that reduces the contract sum, but the contractor may be entitled to valuation adjustments and, depending on the form, no loss of profit on omitted work unless it is re-let to another contractor; the added cost of the new basement geometry, redesign fees and a further approval cycle (realistically two to three months) should be costed before instructing.
Recommend: do not backfill yet; obtain the structural engineer's assessment of whether the obstruction can simply be left in place and the raft used or cut back; only then compare the options with a proper programme and cost comparison, and issue any instruction as a written variation with a valuation basis agreed in advance.