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General Conditions in Construction - Your Questions Answered

You've got your plot of land and found a general contractor you trust to manage your construction project and you're reading over the contract and costing documents and you come to a section called general conditions. What are these extra costs and why are they included? General conditions in construction contracts cover the additional costs that you don't normally think about, over and above the materials and labor costs of building your new property.

They include things like site cleaning and materials handling - all essential costs incurred in construction projects. Fortress Home, Chicago believes in being upfront with our clients so we've prepared this handy guide so you understand exactly what you're paying for.

What are general conditions in a construction bid?

Looking at your bid or contract for your new construction project you may well come across a section of general conditions construction costs or general restrictions. You are probably wondering what these costs are and why you have to pay them. The hidden cost of building a new home or commercial building is actually very logical when you understand what it covers.

Pre-development fees

Depending on the complexity of the project and whether the builder was involved in the project set-up, and assisted with the design of the structure and finding the land, there may be costs associated with this, usually involving personnel time.

Time taken doing estimates and proposals may also be factored into this part of the general conditions project costs.


Project management

If you are working with a general contractor who will be managing the entire construction project for you, you should expect to pay for their project management services. Depending on the complexity of your particular project you may have a full-time project manager or even project managers, especially for large, complex commercial projects.

Permits

Permits may or may not be included in the general conditions depending on the specific project. This part of the cost may also include the time required to apply for various permits required, as well as the actual permit fees.

Project utilities

This is one of the larger sections of general conditions costs and can include various items, depending on the size of the building site and project.

  • Electricity and running water, including drinking water
  • Internet access and phone lines
  • Portable toilets
  • Security systems and alarms for site protection
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Project administration

Certain administrative costs will also be included in the general conditions. This may include wages for project accountants and any required safety officers if the building site requires them. Little things like first aid kits will also be included in this section.

Project equipment

All building sites require some equipment but most of this category will be reserved for larger commercial projects. Project equipment may include:

  • a trailer for an on-site office or rental of office space
  • office equipment
  • temporary fencing for the construction site
  • vehicle costs including gas and maintenance
  • temporary lighting for the site
  • dumpsters for site waste

Site management

It's important to factor in setting up the construction site and taking it down again at project completion. For smaller projects, this will be minimal but it's still important to include these costs in the general conditions.

Material handling

While the actual building materials won't be included in the general conditions, the costs for managing and material handling should be included. This might involve unloading materials from suppliers' trucks and moving them onto the site, or could include going to the local building supplies store to pick up a few additional supplies.

Waste management and clean up

While the cost of hiring a dumpster for the construction site will come under project equipment there is a lot of work required to keep a construction site clean tidy and safe.

Included in your general conditions estimate will be the cost of cleaning up the site at the end of the day and, more importantly for you, the client, cleaning the site thoroughly on completion of construction activities.


What type of contract contains general conditions costs?

When working on construction projects with a general contractor there are various different types of bids and contracts, and not all will contain general conditions costs. How general conditions costs are covered is managed differently in different contract types.

Cost-plus contracts

Cost-plus is is the most common contract type. With this model you, the customer, pay the general contractor's actual construction costs plus a fee, with a guaranteed maximum price. The fee is often a percentage of the total project costs. The direct overhead costs that may seem like hidden costs to building a house are paid for at actual cost. This method has a high level of accuracy as all costs are accounted for but can involve a lot of admin work for the contractor with all the extra bookkeeping.

Hybrid cost-plus/lump sum contracts

In a hybrid cost-plus/lump sum contract all the construction costs will be paid for at the actual price but you will negotiate with the general contractor on a lump sum fee for the general conditions costs. This may be a fixed fee calculated by your builder or a percentage of the other costs.

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Frequently asked questions

What is the purpose of general conditions in a construction contract?

It's important that your general contractor includes all the costs of managing your project in their contract. This means they will be fairly reimbursed for all the extra costs on top of the actual construction labor and materials costs.

General conditions costs are added to most contracts to include these additional hidden costs of building a home or commercial project, from project management to site management.

What are general conditions and requirements?

General conditions and general requirements in a construction contract are all the direct costs that are an integral part of a construction project but aren't directly related to construction activities.


They can cover costs and activities from before construction begins, at the planning stage, through the actual construction, all the way up to project completion.

What's included in general conditions?

General conditions cover many different infrastructure and staff costs required to maintain a successful project. These will all be reasonable costs required to complete the project and can include things such as:

  • power and water
  • project management
  • site maintenance and cleaning
  • security and safety
  • site facilities such as toilets and drinking water

Safe hands with Fortress Home

At Fortress Home we believe in being upfront and honest with our customers about all our costs and general conditions, so when you're beginning your residential or commercial construction don't hesitate to ask about our construction general conditions.

We take great pride in giving our clients accurate and detailed cost estimates and sticking to them and completing all our projects on time and to the highest possible standard. Find out more and discuss your upcoming building project today: [email protected] or +773-770-8607

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