Owners occupy a unique position in construction risk: they largely decide, at the outset, who bears which risks. The choice of delivery method, the contract terms, and the way subsurface and quantity risks are allocated shape the entire risk profile of the project. Get these decisions right and disputes become less likely and easier to resolve. Get them wrong — by trying to offload risks the owner is best positioned to manage — and the result is inflated bids, adversarial relationships, and claims.

A recurring temptation for owners is to shift every conceivable risk onto the contractor through exculpatory language. In practice, this rarely works as intended. Subsurface risk is the clearest example: courts and commentators broadly agree that owners are usually best positioned to assume the risk of unknown subsurface conditions, and that attempting to transfer that risk through exculpatory clauses is difficult and often counterproductive. Contractors who cannot rely on the owner’s data simply price the uncertainty into their bids — so the owner pays for the risk whether or not it materializes.

The differing site conditions clause is the primary contractual mechanism for allocating subsurface risk fairly, and it serves owners’ interests as much as contractors’. By promising compensation for conditions that differ materially from the contract documents, a DSC clause lets bidders price the known scope without padding for the unknown. The result is more accurate bidding and payment for difficult conditions only when they are actually encountered — rather than inflated across every bid regardless of whether the risk eventuates.