When the ground moves up: Lessons from a geotechnical construction loss 

Construction claims aren’t always straightforward. An issue discovered during one phase of a project may trace back to work completed much earlier, sometimes by a different party on a neighboring site.

That possibility makes construction losses particularly complex. To establish what happened, insurers, brokers, contractors and risk managers may need to look beyond the damaged structure and consider the wider construction ecosystem: the type of project, the ground conditions, the stakeholders involved and the sequence in which the work took place.

Understanding the construction ecosystem 

Construction projects move through a connected series of stages, from design and consulting to regulatory approvals, construction, inspection and certification. Decisions made during one phase can shape the risks that emerge during another, particularly once work begins below ground.

The number of stakeholders adds another layer of complexity. When damage occurs, identifying who designed, controlled and performed the relevant work helps clarify how risk was allocated and which insurance arrangements may apply.

This context is particularly important for claims under contractors’ all-risk (CAR) policies, which protects construction projects against accidental physical property damage. Damage may not become visible immediately, and the activity that caused it may have taken place earlier in the project or beyond the insured site. Building a clear chronology helps connect the physical evidence with the actions and obligations of the parties involved.

Recognizing risks below ground

Construction risk evolves as work moves from one phase to the next. Early activities like ground improvement, foundation work, deep excavations, temporary support installation and basement construction can create exposures that do not become apparent until the basement, superstructure or surrounding infrastructure is well underway.

Geotechnical stages can carry particularly significant risks because piling, deep excavation, ground improvement, earth-retaining works and basement construction all interact directly with existing soil conditions. 

In soft clay, displacement piling methods such as driven or jack-in piling can create soil movement that affects nearby structures and underground utilities, even when they sit outside the immediate work area. Ground movement is often associated with settlement, but soil doesn’t just move downward. Under the right conditions, it can also move laterally and upward.

Exploring a real-world geotechnical loss 

A construction loss in Singapore illustrates how that can happen. The insured project involved road widening and upgrades to sewer and drainage infrastructure, including a box drain. On the neighboring land, a factory development was using jack-in spun piles for its foundation.

The box drain ran alongside the factory site and was intended to serve the new development. The distance between the drain and the jack-in piling activity ranged from approximately 11 to 17 meters. Beneath both projects was the Kallang Formation, which contained thick layers of soft marine and organic clay. 

During construction, approximately 200 meters of the drain was pushed upward from its intended position. A comparison of the original and as-built levels found maximum uplift of 332 millimeters.  This movement changed the drain’s invert and base levels, created an irregular profile and compromised the intended flow gradient. 

Following the evidence

Forensic experts appointed by the insurer and the insured conducted separate investigations. The assessments brought together several sources of evidence, including construction and installation records, comparative surveys, monitoring data, geotechnical reports, site observations and stakeholder interviews.

Although conducted independently, both investigations arrived at the same conclusion: Soil displacement from the neighboring jack-in piling was the primary cause of the upheaval and resulting drain damage.

As the piles were pushed into the soft clay, they occupied space and displaced the surrounding soil. Think of it as squeezing a tube of toothpaste: Pressure pushes the contents sideways, then upward. In this case, the soil moved laterally before heaving beneath the box drain.

The neighboring factory site did not comprise any basement structure. Furthermore, as the excavation works were less than 6 meters in depth and were carried out primarily for pile cap construction, a geotechnical professional engineer was not required to be involved during construction. A structural professional engineer oversaw the geotechnical risk instead, and the potential for displacement in the soft-clay conditions was underestimated.

Managing geotechnical risks 

Several measures can help manage soil displacement during jack-in piling. Depending on the conditions, these may include pre-boring at every pile location, installing relief wells, using boundary sheet piles, reducing piling speed and digging trenches near critical structures. Monitoring instruments can also track ground movement and provide an early warning of developing issues.

At the neighboring site, however, these controls were only partially implemented. Pre-boring was completed, but not at every pile location. Monitoring instruments were in use, but relief wells and protective trenches were not installed to prevent movement from happening in the first place. 

Connecting causation and coverage

With the cause established, the next step was determining whether the drain had sustained physical loss as required by Section 1 of the CAR policy, which covers material damage. 

Permanent uplift had compromised the drain’s flow gradient and reinstatement was required. From the insured’s perspective, the damage happened quickly, was unexpected and was not an intended outcome of the project.

Attention then turned to the policy exclusions. No evidence pointed to faulty design, defective workmanship by the insured or gradual deterioration of the drain. With physical damage established and no applicable exclusion identified, the policy responded to the loss.

Final thoughts

This case reinforces two important lessons. First, understanding construction risk requires looking at the bigger picture. The sequence of work, activity on neighboring sites and decisions made by different project stakeholders can all influence how risk develops and where damage ultimately appears.

Second, complex ground conditions require specialized technical and geotechnical expertise. That knowledge can help project stakeholders evaluate how the ground may respond to construction activity and help carriers address policy coverage concerns should a construction loss occur.

At Sedgwick, our team combines engineering insight with claims expertise to bring clarity to complex construction losses. Whether it’s a high-rise residential development, hospital or other commercial building, our multidisciplinary experts are ready to guide you through the claim process.