By Benjamin Thomas & Chenukshi Ratwatte
|
Published 01 June 2026
Site conditions comprise the above‑ and below‑ground physical conditions on, under, or adjacent to a project site. These may be natural or artificial and include ground conditions, contamination, flood risk, existing structures and services, and, for refurbishment projects, the condition of existing buildings.
Unforeseen site conditions can significantly impact a project, giving rise to programme changes, increased costs and delays to completion. Such delays may, in turn, expose the party undertaking the works to liquidated damages and increase the risk of disputes regarding risk allocation.
Accordingly, where a Housebuilder is the party undertaking the works for a project, it should carefully consider site condition risks and ensure they are clearly and appropriately allocated within the contract.
The Common Law and JCT Position
Under common law, where a contract is silent, site condition risk generally rests with the party undertaking the works. A construction contract is, in essence, the party undertaking the works' promise to complete the project for the agreed price. In the absence of misrepresentation or an express warranty, the party named "Employer" provides no implied warranty as to the condition or suitability of the site, nor the accuracy of any site information supplied.
The JCT Design & Build 2024 broadly reflects this position. It does not expressly allocate site condition risk so site conditions are typically at the "Contractor’s" risk, and the "Employer" gives no warranty as to the condition of the site or the reliability of site information provided. That said, the "Contractor" may be entitled to additional time and/or cost where specific site risks such as asbestos or unexploded ordnance are expressly identified as a “Relevant Event” and/or “Relevant Matter”.
Housebuilders may therefore wish to amend standard drafting to achieve a clearer and more balanced allocation of site conditions risk when undertaking the works.
It is also important to note that a "Contractor" cannot be required to assume risk in respect of works falling outside the defined scope. Any site risks relating to excluded items will remain the responsibility of the employing party.
Drafting and Practical Considerations
Where a Housebuilder is expected to assume the majority of the site risk, it is then exposed if the contract price or period for completion prove insufficient to deal with any conditions which have not been allowed for. To mitigate this exposure, Housebuilders should ensure they fully understand the site and where practicable require that the Employer commissions appropriate surveys prior to entering into contract. Where information is limited, a proportionate risk allowance may need to be reflected within tender pricing.
Careful consideration should also be given to the drafting of the relevant building contractor and/or development agreement. A "Contractor" cannot be required to assume risk in respect of works falling outside the defined scope so site condition risks relating to excluded items will remain the responsibility of the employing party. The scope of works and excluded items should therefore be clearly defined, with any works falling outside that scope expressly treated as variations, potentially entitling the Housebuilder to additional time and/or costs.
Housebuilders may also wish to broaden extension of time and additional costs and expenses provisions to include unforeseen site conditions generally or in relation to specific issues for that particular site. This can reduce the risk of liquidated damages and, in turn, limit the need for significant risk premiums, improving the competitiveness of tenders for registered providers and developers.
Finally, site risk should be allocated by reference to control and access. The Housebuilder's responsibility for site risks should be limited where inspection or investigation is restricted, for example in the case of existing or occupied buildings not owned by the Housebuilder. In such circumstances, responsibility for those risks should rest with the "Employer" under the development agreement.
Conclusion
Unforeseen site conditions can have significant commercial and programme implications. In the absence of express contractual provisions, the default position is that site risk sits with the party undertaking the works.
By proactively addressing site risk through informed investigation and carefully drafted contracts, Housebuilders can better balance risk, maintain realistic tender pricing, align responsibility with knowledge and control, and reduce the likelihood of disputes.
