Differing Site Conditions: The Claim That Comes Up Out of the Ground

A differing site conditions (DSC) claim arises when the conditions a contractor encounters on site are materially different from what was represented in the contract documents or from what would reasonably be expected for the project type and location. On construction projects involving excavation, demolition, or subsurface work, DSC claims are common — and the contract provisions governing them are among the more technical areas of construction law.

The classic example: the bid documents include soil boring logs showing clayey soils to 20 feet depth. The contractor bids based on those logs. Excavation begins, and at 8 feet depth the crew hits solid rock that wasn't in any boring log. The work to remove the rock is substantially different (and more expensive) than excavating through clay. The contractor has a differing site conditions claim.

Two Types of DSC

The FAR (Federal Acquisition Regulation) differing site conditions clause, which many private contracts mirror, recognizes two types of DSC claims:

Type I claims are easier to prove because the comparison is specific — the contract said X, the reality is Y. Type II claims are harder because the contractor has to prove the condition wasn't reasonably expected given the site's history and typical conditions. A contractor excavating in an old industrial area might find it harder to claim unusual conditions than one excavating in previously undeveloped land.

What Counts as Materially Different

"Materially different" means substantially different in a way that increases cost or time. Minor variations don't qualify. Finding 11% more rock than boring logs suggested probably isn't material. Finding solid rock where logs showed only soils is material. The distinction is one of degree and fact-specific; what matters is whether the difference actually drove incremental cost and time.

Courts and boards have generally required that the contractor couldn't reasonably have anticipated the actual conditions from the information available at bid time. A contractor who ignored available data and bid optimistically doesn't have a DSC claim — they have a bid estimate problem. A contractor who relied reasonably on the information provided and encountered something that information misrepresented has a DSC claim.

Notice Requirements

DSC claims almost always require prompt written notice to the owner. The FAR DSC clause requires notice before the conditions are disturbed. AIA contracts typically require notice within 21 days of the contractor becoming aware of the condition.

The notice requirement serves two purposes: it gives the owner a chance to investigate the condition and direct how to proceed, and it preserves the claim. Conditions that are dug out, buried, or otherwise disturbed before notice may be unverifiable later — and contracts often bar claims for conditions that weren't preserved for inspection.

Documentation at Discovery

When a potential DSC is encountered, the documentation requirements are specific:

The Owner's Response

Once notified, the owner typically investigates. The owner's geotechnical consultant may visit the site, the architect may review the condition with the contractor, and the owner's project management evaluates the potential impact. The owner then directs how to proceed — often with a construction change directive allowing work to continue while pricing and schedule impact are negotiated.

If the owner agrees the condition is a DSC, the parties negotiate the cost and schedule adjustment. If the owner disagrees that the condition qualifies as a DSC, the contractor has preserved the claim and can pursue it through whatever dispute resolution the contract specifies. Either way, work typically continues; DSC claims rarely justify stopping work indefinitely.

Cost Impact Calculation

DSC claims typically include both cost and time impacts. Cost impacts include:

Time impacts are calculated via the standard time impact analysis methodology, treating the DSC event as the cause and measuring its impact on the critical path schedule.

Contract Variations

Not every contract has a standard DSC clause. Some contracts — particularly lump-sum private contracts — include language assigning subsurface risk entirely to the contractor. Common language: "Contractor has examined the site and accepts all conditions as-is, with no adjustment for any subsurface conditions encountered."

These site-condition risk allocations are generally enforceable, though courts sometimes reject them when the owner had specific information about adverse conditions and withheld it. The general rule: what the contract says, the contract says. A contractor signing without a DSC clause has limited recovery options when conditions differ.

For this reason, reading the DSC clause at contract negotiation is essential. A standard AIA or FAR DSC clause provides reasonable protection. Custom clauses that shift risk to the contractor without compensating premium are worth identifying and addressing before signature.

Common DSC Situations

Bottom Line

Differing site conditions claims arise when what the contractor finds is materially different from what was represented or reasonably expected. Preserving the claim requires timely written notice, documentation at discovery, and protection of the condition for inspection where possible. The cost and schedule impact is calculated through standard claim methodology — but the procedural elements (notice, documentation, preservation) are what make or break the claim's enforceability. Contracts with standard DSC clauses provide reasonable protection; contracts that shift subsurface risk entirely to the contractor require a different bidding approach upfront.