Learn About General Conditions in Construction Contracting
So what are general conditions? 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. Below we will provide a list and description of some of the most common items you can include in your construction cost.
Usually, they are different from overhead and profit, although sometimes supervision can be included.
Items to Be Included
Normally a contract provision will allow you to have a separate line item that you can use to estimate your general conditions cost and if not, you might want to spread the cost into multiple items so you can recover the cost. Anyway, you will need to understand what and when these costs can be built-in into your estimate sometimes as a pass-through to your customer. The following are the most common items that you must include under your general conditions.
- Pre-Development Fee: Many times this item can be overlooked, but remember that you spent time and effort putting a preliminary estimate, proposal, and planning before being awarded, and those hours and costs should be recovered.
- Utilities: You site office needs power, washrooms, and all utilities in order to do an efficient job. All utilities should be considered including the internet, water, heating, power, and phone lines. Please be sure to include all hook-up fees for these services and do not forget to include security and alarm systems as well if needed. Portable toilets must be included in this category.
- Office Trailers: If you need to set up an office trailer, rent a property or similar, these costs should also be considered. Think about parking space, access entry, rent of office equipment, computer, hardware, software, cleaning supplies, office supplies, temporary fences, printers and even cleaning supplies for the office.
- Vehicles: If your crew needs to move around the site using 4 x 4 pickups, bikes (as in some instances), Try to get your best estimate as of gas, maintenance, and permits required for the vehicles. Ask for a proposal of maintenance required for each vehicle.
- Lay-down Yard: Sometimes is required to prepare a staging area or lay-down yard to receive all the material. Include the cost of grading the area, fences, temp lighting, security, crushed stone as grade material, walkways, covered areas and cranes/equipment to offload equipment and material.
- Dumpsters: Trash, garbage, and debris can be a major component of a construction project. While some of the cost can be associated with construction activities, you will also generate some trash from your office and some debris from the lay-down yard. These costs should be part of the general conditions and you will need to account them in your estimate.
- SWPPP: Erosion control methods, if not part of the civil work, should be included in the general conditions. 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.
- Mob and Demob: Mobilization and demobilization could add up to your estimate. However, when properly planned, it can even generate some opportunities for you, so cost-saving solutions might be implemented. If it's a multi-phase project where mobilization needs to be done multiple times, then it can be a significant portion of the project cost, so this can be included in your general conditions.
- Drinking Water: How are you planning to provide water to your workers and staff? Are you providing ice as well? All of these costs should form a part of the general conditions cost too.
- Clean Up: A construction site can get messy. If you plan to have cleanup crews, you better plan for them. Construction crews or clean-up crews will be required to maintain a site clean so accidents can be minimized.
- Project Staff and Admin Wage: This item sometimes is included in estimates and some other times, these wages cannot be 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 them as well, if they are not part of the actual activity cost.
Other General Conditions Items
There are endless items that can be included as part of the general conditions on a construction contract. The following list provides a brief idea of other items that can be considered:
- Safety Manager
- Project Scheduler
- QA/QC Manager
- Project Manager(s) and Staff
- Document Reproduction & Postage
- Site Signage
- Temporary Entries and Truck Washes
- Street sweeping
- Temporary Lighting
- As-built & Record Document Preparation
- Project Event Costs
- Employee I.D.
- Background Checks
- PPE for Staff & Visitors
- First Aid
- Safety Program Administration & Training
- Safety and Employee Recognition Programs
- Time-lapse cameras and record keeping systems
- Material delivery costs
- Building permit costs and government required fees
- Communication Systems, chargers, antennas
- Temp building insurances, ramps, and structures
- Marketing, advertising, promotional and project related handouts
- Fire protection
General Condition Risk and Issues
The term general conditions might not represent a way for you to recover costs associated with poor workmanship. It is related to the actual work being carried out for project completion. There are some risks and issues related to the general conditions, that you will need to be aware of. See below, do you agree?
- Some general conditions will require you to submit evidence of backup of the incurred costs
- Bonus and special perks cannot be included or will be rejected by the customer
- Equipment and Tools can be double accrued in both their activities and the general conditions
- Depreciation can sometimes be challenged by the customer.
- OT wages from management will not be part of the GC's
- A customer might ask for a credit, contract language must be specific, if there is a scope reduction in the project
- Mileage reimbursement not according to establish guidelines
- Cost of rental and equipment at significantly higher rates than industry standards