Learn About General Conditions in Construction Contracting
General conditions are all of those items that will not form part of the actual product, once the project has been finalized. The items included under the general conditions are all of those tools, resources, and equipment needed to build a project, but not directly related to the physical construction activities, and that you can be entitled to be compensated for. This list includes descriptions of some of the most common items you can include in your construction costs. Usually, they are different from overhead and profit, although sometimes supervision can be included.
Common General Conditions
Normally a contract provision will allow you to have a separate line item that you can use to estimate your general conditions costs, but another option is to spread the costs into multiple items. One important first step is to understand what these costs are and when they can be built-in into your estimate. The following are the most common items that you must include under your general conditions.
- Pre-Development Fee: You spent time and effort putting a preliminary estimate, proposal, and planning before being awarded, and those hours and costs should be recovered. Many times this item can be overlooked, but remember that these costs can be significant and should be built into the contract.
- Utilities: Your site office needs power, washrooms, and all utilities—including internet and phone lines—in order to do an efficient job. Be sure to include hook-up fees for these services and do not forget to include services such as security and alarm systems, as well as portable toilets in this category, if they are used.
- Office Trailers: If you need to set up an office trailer, rent a property, or source similar services, these costs should also be included. Costs related to the office space include parking space, entry access, office equipment rental, computer equipment and software licenses, office supplies, temporary fences, printers and even cleaning supplies for the office.
- Vehicles: If your crew needs to move around the site, try to get your best estimate of costs for gas, maintenance, and permits required for the vehicles. Plan for everything, including asking for an estimate of the maintenance required for each vehicle.
- Lay-Down Yard: You may be required to prepare a staging area or lay-down yard to receive all material required for the build. Be sure to include the costs of grading the area; constructing fences, walkways, and covered areas; and installing temporary lighting. If cranes or other equipment will be needed to offload equipment and material, be sure to account for this, as well.
- Dumpsters: Trash, garbage, and debris can be a major component of a construction project. While some of these costs can be associated with construction activities, you will also generate trash from your office and debris from the lay-down yard. For this reason, these costs should be part of the general conditions.
- Stormwater Pollution Prevention Plan (SWPP): Erosion control methods, if not part of the civil work, should be included in the general conditions. Materials such as hay bales, dust control systems, water trucks, and all other components must be included in the general conditions. Make sure to include the costs of repairs, inspection, and maintenance of the system.
- Mobilization and Demobilization: Mobilization and demobilization can be extremely expensive, especially on multi-phase projects where mobilization will need to be done multiple times. It will be important to plan ahead and account for all costs to ensure you are compensated appropriately.
- Drinking Water: How are you planning to provide drinking water to your workers and staff? Will you need to provide ice as well? All of these costs should form a part of the general conditions costs.
- Clean Up: Don't underestimate the importance of budgeting for these services. Construction crews or clean-up crews will be required to maintain a clean site and minimize the risk of accidents.
- Project and Administrative Staff Wages: Not all costs or wages can be included as part of the general conditions. Safety officers, barricades, traffic control devices, first aid kits, and staff wages can be part of the general condition items.
- Tools: Many times, tools and equipment will be required to complete tasks and activities on a construction project. Be sure to include any tools that are not already part of the actual activity costs.
Risks and Issues
There are some rules and risks involved with general conditions that you will need to be aware of. General conditions costs are related to the actual work being carried out for project completion and should not represent a way for you to recover costs associated with poor workmanship. Other aspects to be aware of include:
- Some general conditions will require you to submit evidence of the incurred costs.
- Bonuses and special perks should not be included—if they are, they will be rejected by the client.
- Equipment and tools can be double accrued in both project activities and the general conditions.
- You may want to account for depreciation in the general conditions, but this can sometimes be challenged by the customer.
- Overtime wages for management cannot be part of the general conditions.
- A client might ask for a credit on general conditions costs if there is a scope reduction on the project.
- Mileage reimbursements are not included in general conditions according to established guidelines.
- Costs of rentals and equipment need to be at rates consistent with industry standards.