May 27, 2022
General Conditions in Construction: What You Need to Know
Construction projects require an immense amount of planning and attention to detail. It is critical that your construction team properly accounts for all temporary expenses needed to complete the project. these are otherwise known as General Conditions.
- General conditions vary in cost depending on scope of project
- General conditions are a soft cost expense
- General conditions can boost the successfulness of the project
What Are General Conditions?
General conditions in construction refer to the temporary needs of the project needed to mobilize construction. This includes the equipment and tools needed to start and complete the project but are not part of the final construction product. The cost of general conditions should be agreed upon by both the owner and the contractor. Oftentimes contracts will contain a single line item that accounts for general conditions, however, some might break up the items.
General requirements and general conditions are often confused because of their nominal similarity, but what's the difference? General requirements refer to the mechanisms that catalyze the project such as payment applications, protocols for submittals/change orders, and scheduling.
Soft Costs VS Hard Costs
It is important to note that General Conditions are considered "soft costs". In construction, you might hear the terms soft and hard costs. A soft cost refers to expenses that are not directly attached to the physical construction project. For example, an architect must be paid for designing the project at hand. Their work is not physically attached to the final product, however, it is integral to the project. Hard costs on the other hand refer to expenses that will be part of the final product. A hard cost could be the price of kitchen tiles for the construction of a new home.
Common Categories of General Conditions
There is a wide range of costs associated with general conditions, however, most costs fall under two main categories: Administrative and Site Management.
Oftentimes people assume that administrative costs occur only before the start of construction. While it is true that certain administrative functions like monitoring contracts, design approval, and budget estimation are done prior to construction, there are other administrative costs that occur during construction. Administrative fees come primarily in the form of wages, management, and permit costs.
Large construction projects often require on-site staff as part of the project management team. They are responsible for often overlooked functions such as processing invoices, coordinating construction schedules/timelines, getting permits and inspections, managing payroll, and site supervision. For smaller projects, less hands-on management is required however it is still vital to the success of the project.
An incredibly important aspect of project management is material handling. General Contractors (in collaboration with project managers) are responsible for the coordination, transportation, and proper delivery of materials. They will supervise all incoming shipments and ensure that materials are properly handled and stored. Material handling must be properly coordinated with the construction timeline and delivered to the correct area of the construction site. Without proper coordination, a project might be delayed.
- Temporary office space: To facilitate administrative functions, temporary offices are often placed onsite. Project managers and administrative staff will work to ensure that the project is coordinated and efficient.
- Temporary electrical: When constructing a new building, an electrical source is needed to power the tools needed to construct the project properly.
- Temporary bathrooms: Contractors must provide workers with proper restroom facilities so they can continue to work on the site.
- Construction site security: For safety and security all construction sites utilize temporary fencing.
- Water: it is essential that contractors ensure that workers have access to drinking water.
- Scaffolding: many construction projects require temporary scaffolding to stabilize the structure while building other permanent support.
- Waste management: Construction projects will constantly have waste flowing out that needs to be handled. It might take days to remove all waste so it is important to provide instruction for waste management in the general conditions of the construction contract.
Why General Conditions in Construction Matter
General conditions allow for the start, maintenance, and efficiency of construction while facilitating all areas of project management. According to the International Journal of Project Management, general conditions have "important ramifications for the likelihood and degree of project success… well thought-out contract conditions can aid in ensuring a smoother completion of the constriction process". The contractor and the owner should clearly outline and agree on these provisions to protect against risk.
Without temporary utilities and safety measures, the project would become impossible. These factors are often overlooked because they are not part of the final project. However, It is important to properly account for the cost of general conditions so that the contract contains an accurate estimate of needed expenses. The guidelines for what counts as general conditions are very blurry, so ensure that you can justify every item in your general conditions.