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Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

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Tilbake

Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

‍

‍

Tilbake

Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

‍

‍

Tilbake

Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

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Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

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Physical working surface and ground conditions

Kortversjonen

1. Introduction

The rules on the risk location of the physical working surface and (unforeseen) conditions at the base are thematically placed as part of the builder's benefits.

While it may be somewhat strange to characterize the risk of something as part of a “performance” it is not accidental.

The main rule and starting point is that the builder has the risk that the physical working base and the ground conditions under which the contractor will perform his works are such as he “had reason to count on the basis of the contract, the nature of the assignment and the circumstances at large”, cf NS 8405 paragraph 19.3, second paragraph.

Ground conditions and the physical working environment nevertheless create challenges in practice.

When unforeseen circumstances are uncovered, one will normally be early in the construction project, the contractor has planned his works, rigged and mobilized to implement it and then suddenly becomes encumbered because something unexpected comes up.

Unforeseen circumstances at such a stage can create great uncertainty, one does not know what the actual consequences will be, nor can one be sure whether what one is left with by uncertainty is the only unforeseen that will arise.

In furtherance of this, the contractor will notify the deadline extension and remuneration adjustment. The builder will most often be of the opinion that he has provided all the necessary information and that what is revealed by so-called unforeseen circumstances is the contractor's risk.

The consequence is therefore often that the builder rejects all notified persons. Something that may be related to a corresponding feeling or experience of uncertainty about future conditions that may cause delays throughout the project.

2. Overview of the rules

As mentioned, we take NS 8407 as a starting point, and below we have adopted a matrix in which the rules of all three standard contracts concerning the physical working environment and ground conditions are incorporated.

3. Risk Placement Background

When we talk about risk in contractual relationships, it may be appropriate to state that one is referring to something unknown about which neither party had knowledge.

Since there are only two parties, one must have a mechanism for where the consequences of this “something” that has emerged as a challenge are to be placed.

Whether the risk of this “something” should be placed with one or the other is not whether one or the other is to reproach. The governing of the placement is -- entirely overarching -- a question of who is best placed to manage such a risk.

It is the builder who decides where a building or other structure will be erected, where a road or tunnel will be constructed or which structure will be rehabilitated.

The developer does not initiate such a project without first having had time to obtain the necessary information about the conditions on the site, ground conditions, the nature of the building where, for example, previous as built drawings and other FVD documentation are of interest, etc.

In addition, it is the builder who will make use of the contract object when it is completed, and who has the absolute greatest economic interest in what is to be erected, constructed or rehabilitated.

The contractor does not normally enter the project until he reviews the tender and competitive basis etc. during the relatively short time available before the tender deadline expires.

Therefore, from an overall balance of such conditions, the main rule is that the builder has the risk of the unforeseen.

It is also the builder who has the best conditions for surveying so that there should be nothing unforeseen in the ground or in the physical working surface.

However, and it is important to point out, when the builder has given up everything he has acquired from knowledge of the ground etc. as part of his tender and competitive basis, the question becomes what a normally sensible contractor would have to understand by reviewing this information.

If the conditions do not differ from the contractor “had reason to reckon with” The consequence will be that the risk is placed with the person who now has the best conditions to deal with the challenge, and then it will be able to become the entrepreneur.

4. The contractor's physical work basis

In all three standard contracts, a distinction is made between “relationship at the ground” and “the physical basis of work”.

In NS 8407, the physical working surface is treated in paragraph 22.3.

Ground and ground conditions are normally associated with the natural and pristine such as soil, mercury clay, moraine masses, mountains, rocks, gravel, sand, etc.

It “physical workspace” must therefore be something else, and we consider this to be something man-made. It can either be the work of a contractor that has just been completed and then a new contractor is going to build on this. Alternatively, one may be faced with an older, existing building to be built on, rebuilt, rehabilitated or otherwise.

This understanding is supported by the wording of the provisions of the three standard contracts which state that the builder “shall make available (...) the physical base of work, including the work of others on the building or plant (...)”.

Thus, if the contractor's mission is to rehabilitate an older office building, the office building will be the physical base of work.

Typically, such a project will involve the final product meeting the current technical requirements according to plan and building legislation and related regulations (TEK 17).

In this case, the general contractor must take into account that the works will be affected by the fact that the construction of the building is older, outdated and thus will be able to entail some works that one does not have full control over from the start.

In a turnkey contract, the builder will have had a functional description prepared, and ideally have obtained all the as built drawings and FDV documentation from the time the building was built. Presumably, RIB will also have made calculations to map whether the construction needs to be strengthened so that the builder's plans can be realized.

Fire Advisor (RiBR) will have reviewed fire drawings etc to obtain the builder enough information about where fire walls and cells are located, clarify if anything needs to be done in relation to the builder's new plans etc.

However, it is not a given that the available documentation is correct, and thus it is not given that the engineering carried out in the preliminary project gives a correct picture of what actually needs to be done.

Nor does anyone know whether the original office building has been executed exactly as the as built drawings indicate.

If it turns out that the building has too little bracing compared to what was assumed, that the fire separator does not go where it was thought or there are other surprises that appear, the question becomes whether this is a risk for the contractor or the builder. Additional costs and the need for longer construction time are likely to be a consequence regardless of who bears the risk.

Such issues as this may, in various variations, also appear in execution centers where it is NS 8405 paragraph 19.3 or NS 8406 paragraph 18.1, first paragraph letter b that governs the relationship.

5. Judgment of the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642)

In the Borgarting Court of Appeal of 22.1.2024 (LB-2023-044642), statements of high relevance with regard to the risk of the physical working environment and the assessments made when deciding on the risk location are taken.

We have written an article about this judgment under “Recent jurisprudence” and it can be read here.

This case concerned the relationship between the builder and the general contractor for which a contract had been concluded on the basis of NS 8407.

The case concerned the rehabilitation of an older office building erected in the 1980s.

The builder had prepared a function description and it was clear from this that a number of works were not discussed. On the contrary, they “works and building parts not mentioned, the general contractor is free to perform as he pleases (...)” as long as statutory requirements etc were heeded.

Moreover, it was stated that the contractor “is responsible for obtaining all relevant and necessary additional information in order to be able to offer a complete delivery”, as well as “evaluate the offer material and include all works so that the delivery is complete and regulatory”.

The Court of Appeal also highlighted that providers had been encouraged to “to examine existing drawings and other engineering of existing support systems in the archives of the Planning and Building Administration”.

The duty to investigate included, inter alia, “whether reinforcements or an increase in the number of pillars were required in connection with the rebuilding”, and in that regard, the Court of Appeal held that the builder had posed “requirements for the providers' own preliminary investigations and the collection of relevant information”.

With reference to what is the case of pillars, we will assume that these were hidden so that it was not possible to make a visual check. On the other hand, it is conceivable that the building case file at the Planning and Building Administration could provide adequate information on the number and dimensions so that loads etc could have been calculated.

However, central to our review of NS 8417 paragraph 22.3 is the following, which is taken from the judgment of the Court of Appeal:

“In the court's view, it is clear from the request for tender that the builder's preliminary project was not intended to be any nearly complete basis for its execution. It was primarily a function description, which the general contractor had to provide the necessary engineering to fulfill. It was therefore MBF's responsibility to make necessary and possible clarifications of any uncertainties in the project prior to the submission of tenders, possibly making reservations in the tender.

Since the construction was originally from the early 1980s, and such requirements have changed at a number of points since then, this in itself must make it conceivable that, for example, existing carrier systems would have to be upgraded to meet current load requirements.

The Court also considers that a number of the circumstances MBF has subsequently relied on as a basis for amendments could have been uncovered before the offer was made.

MBF has explained that they relied solely on the material of the RFQ, without doing any further research. They also did not use any RIB (consulting engineer construction) to assess existing support systems against the requirements of the contract. (...)

There was no requirement for the bidders to involve external advisors during the bidding phase, but a rehabilitation project such as Rådhusgata 5 would probably have resulted in MBF having uncovered a number of the issues that have subsequently been invoked as changes, and in any case provided a better basis for assessing the risks involved in the project.

The Court also mentions under this point that the foregoing is central to the assessment under NS 8407 paragraph 22.3, second paragraph, which MBF has referred to in connection with several claims. The provision states that the Builder bears the risk that the physical work base is as the general contractor had reason to expect based on the contract, the nature of the assignment and the circumstances in general.

The nature of the mission was rehabilitation.

The building was from the 1980s. The contract clearly stated in a number of points that the contractor had to take into account that, for example, the building's existing support system was not necessarily dimensioned to meet the requirements of the function description and current regulations”.

In any case, the judgment shows how thoroughly and thoroughly the court assesses every aspect of a case, that it makes a comprehensive assessment and sets out relatively specific requirements for what a tenderer in a project must implement in order to make the most correct offer possible. The Court of Appeal is also clear that to the extent that an offeror wishes to secure himself, then necessary reservations must be made in his offer.

6. Relationships in the ground

6.1 Introduction

In terms of ground conditions, there are roughly the same issues that emerge, purely in principle.

We start from NS 8407 which, in addition to being the standard used most often today, also has a provision paragraph 23 which appears to be far more clarifying and enlightening than the provisions of NS 8405 paragraph 19.3 and NS 8406 paragraph 18.1, first paragraph c, respectively.

The main rule and starting point is that the builder has “the risk of conditions at the ground”, but the premise is that the conditions “deviates from what the general contractor had reason to count on when preparing the tender”.

6.2 Builder's Information Obligation

It is primarily the builder who should ensure that the contractor receives sufficient information, and this information is preferably provided during the bidding phase.

It follows, therefore, from the third paragraph of NS 8407 paragraph 23.1 that the developer must disclose all of these “knew or needed to know” whether “conditions of the ground, the construction site or its surroundings”.

It is a condition that “it was close to assuming that the general contractor” was interested in the relevant information.

A builder should not speculate on what a contractor may not have a “interest to get”.

If a relationship first emerges during the construction period one can be reasonably certain that the contractor would have had an interest in knowing about this at the tender stage.

Our advice is therefore that the builder would rather disclose too much than withhold in the belief that the information is not of interest.

The developer should disclose everything he knows — at least as long as there is relevant information and there are reasonable grounds to believe that the information may be of interest.

That said, the builder is liable for any incorrect information provided, and it is the builder who has the risk of the consequences of any incorrect information provided, cf. paragraph 23.1, fifth and sixth paragraphs.

This may indicate that a certain amount of caution is exercised when sharing information with the providers in a bidding competition.

One should not present information completely indiscriminately, but ensure the quality of what one wishes to provide as far as practicable.

At the same time, there will always be a limit to how thorough one can allow oneself to be.

Consequently, a risk balance must be made from time to time, and it must necessarily be concrete.

One should also be aware of the clarification that the developer is only at risk of the consequences of incorrect information if these may have “seemed in on the offer”.

If it turns out that the erroneous information has only been of theoretical interest to the entrepreneur and cannot have contributed to the offer, then the erroneous information cannot be given any weight when placing the risk.

Incidentally, the intersection of when the information must be correct and exhaustive is “at the preparation of the offer”, cf NS 8407 paragraph 23.1, first paragraph.

6.3 General contractor's duty of investigation

It is further stated in the second paragraph of NS 8407, paragraph 23.1, that the general contractor has an obligation to carry out surveys himself as part of his preparations before submitting tenders.

Of course, it is not possible for the builder to verify that such surveys are carried out by all providers, or that this was actually done by the contractor with whom he entered into the contract.

In NS 8407 paragraph 23.1, fourth paragraph, it is taken into account that the general contractor may have failed to carry out its required investigations.

If there is a disagreement between the contractor and the builder about a possible unforeseen situation in the ground, one must first identify what information actually existed, and what “the general contractor had reason to reckon with” In fact, if he had that knowledge.

In such a situation, one does not ask whether the general contractor actually made the investigations he was supposed to under NS 8407 paragraph 23.1, second paragraph. Instead, it is assumed that such investigations were carried out.

Accordingly, the general contractor will not gain any benefit from not fulfilling its duty of investigation.

From NS 8407, paragraph 23.1, second paragraph, letter a, it follows that the general contractor shall “Carry out a thorough inspection of the construction site and its surroundings”.

If an invitation to tender is invited, attendance at the invitation will normally be sufficient to deem the condition fulfilled, unless special reasons warrant a subsequent and more thorough examination.

Section 23.1 (b) of the second paragraph of NS 8407 states that the general contractor shall contact public agencies to obtain any knowledge of the ground conditions such as pollution, geological and geotechnical conditions “to the extent that such information has not been provided by the developer”.

From experience, builders present what they are familiar with, but nevertheless encourage providers to contact public authorities themselves.

From NS 8407 paragraph 23.1, second paragraph (c), it is stated that the general contractor shall also: “Obtaining information on cables and pipes”.

Such information can be obtained from e.g. “Ledningsportalen.no” and should be a reasonable standard exercise to undertake. By the way, the provision states that the general contractor does not need to obtain such information if the builder has already done so.

If the information obtained from public authorities or other bodies turns out to be incorrect, it is the builder who bears the risk, cf. NS 8407 paragraph 23.1, last paragraph, last sentence.

6.4 Judgment of the Borgarting Court of Appeal of 27.1.2022 (LB-2020-066936)

This judgment (Gråkjær) is an illustrative example of how the Court of Justice reasons and proceeds in its mapping of fact.

The case concerned a land-based fish farm outside Fredrikstad that was designed and partly built with foundations that were not adapted to local soil conditions.

The court ruled on a number of questions, but here the claim that the ground conditions were the builder's risk is dealt with here.

The Court of Appeal concluded that the ground conditions were that the general contractor had reason to count on, cf. NS 8407 paragraph 23.1.

Of particular interest to the trade-offs made by the Court, the following is found from the judgment in quotation:

“The assessment of what Gråkjær had reason to count on must be based on all available information, including the contract, the nature of the assignment and the circumstances in general.

As a general rule, therefore, Gråkjær is entitled to a remuneration adjustment and any extension of the deadline if there is a discrepancy between what Gråkjær had reason to expect from the ground conditions and the actual conditions that were subsequently revealed.

It was known from early in the pre-project phase that there was clay soil on Øra, with varying depths to mountains and thus a high risk of skew deposits.

Detailed information on the ground conditions was later provided in Inhousetech's data report on August 8, 2015.

The Court of Appeal considers that there are in particular three pieces of information of central importance that result from the document, and of which the Court of Appeal has found it probable that Gråkjær had knowledge of at the time of the offer on 19 April 2016. One is that there is clay soil with a risk of skewing on Øra. The second is that Fredrikstad Seafoods/Inhousetech had proposed soil reinforcement with KC piling as a measure to reinforce the ground to absorb the forces from the construction plant. The Court of Appeal cannot see that there are any errors, omissions, or other weaknesses of significance in the first two information, about clay soil and soil reinforcement, and this has not been claimed by Gråkjær either. The third information is that the production facilities are assumed to be founded with a constructive reinforced base plate.

Foundations are something other than foundation reinforcement. Fundraising is Gråkjær's commitment. (...)

The Court of Appeal is of the opinion that the failure was thus not in errors in the geotechnical material, or the way in which this was communicated to Gråkjær in the project, but in that Gråkjær did not have sufficient competence to use the information in his design. As the Court of Appeal considers the evidence in the case, it is likely that Gråkjær did not have sufficient knowledge of KC piling. If Gråkjær had become familiar with the method, they would have realized that KC piling is not a foundation solution, but a method of foundation reinforcement.

However, the Court of Appeal considers that the misunderstanding is caused by Gråkjær's failure to professionally process the available, correct information, which Fredrikstad Seafoods v/ Inhousetech provided about the reason.

The conclusion on this point is that, on the basis of the information available at the time of preparation of the tender, Gråkjær could not expect any ground conditions other than those that actually existed after the base reinforcement made by Fredrikstad Seafoods”

7. Transport of ground conditions risk

In NS 8407, paragraph 23.2 “Agreed placement of the risk of conditions in the ground” there is a special provision not found in NS 8405 and NS 8406, namely the possibility of transferring the risk of unforeseen circumstances from the builder to the general contractor.

Nevertheless, there are limitations on what and how much risk can be transferred, cf. NS 8407 paragraph 23.2.

First, the developer cannot transfer risk if it turns out that the actual conditions are significantly different from what was reasonably expected.

How the materiality requirement should be defined is somewhat unclear and it is difficult to provide a description of the materiality requirement that is sufficiently indicative.

Most likely, it requires expertise about the facts and how the experts assess the present information in relation to the facts on the ground.

The builder also cannot disclaim responsibility and risk of “Incorrect, incomplete or incomplete information” which he has given.

It is quite common to stipulate that one cannot freely disclaim responsibility for mistakes made by oneself.

However, the provision contains a clarification that such errors do not have any significance if “one can assume that” the error “I haven't responded to the offer.”.

As mentioned earlier, the builder will always have the risk of incorrect information with government agencies, cable companies, etc., cf. NS 8407 paragraph 23.2 in conjunction with 23.1, last paragraph.

Finally, it is mentioned that the Standards Committee has recommended that, in cases where there is a question of transferring the risk of conditions in the ground to the contractor, the “Necessary basic investigations are being obtained” in advance of the fact that the builder sends out the competitive basis. The result of these investigations should also be attached to the competition basis.

In our view, a builder should always conduct ground surveys.

It is much better to get as much clarity as possible about what is in the ground before the bidding contest.

If it turns out that the ground conditions are better than expected one gets the pleasure of lower prices than originally budgeted.

If it turns out that the ground conditions are worse than expected, there is price competition as to who can handle this in the most affordable way possible. On the other hand, if the challenges are discovered after the contract has been awarded, there is no competition for price, and you are notified of claims for a deadline extension at the top.

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