The term “general conditions” in construction cost parlance describes expenses that support a project without directly relating to job site activities like pouring concrete or mounting steel beams. Experts also often refer to these as “soft costs.”
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The associated infrastructure and equipment do not get handed over to the client along with other components (including the structure itself) following the project’s completion.
Keep reading to learn more about general conditions construction costs, including where they fit into the project planning process.
What is General Conditions in Construction?
In construction, General Conditions represents a set of terms, services, and expenses crucial to running a project smoothly—without directly tying into physical construction tasks like pouring concrete or installing fixtures. These costs are like the operational backbone, covering the administrative, logistical, and legal aspects that allow the hands-on work to proceed effectively. General Conditions define the project’s working framework, laying out management duties, roles, and all the support costs necessary for the project’s successful completion.
At its core, the purpose of General Conditions is to create a solid structure for project execution. This framework clarifies stakeholder responsibilities, establishes decision-making pathways, and specifies indirect costs that underpin the construction work. This structure also helps reduce risks and maintain project continuity, all while enforcing essential guidelines and standards. By addressing these elements, General Conditions help ensure that the project is well-organized, financially sound, and completed on time.
Key Component of General Conditions: All indirect costs critical to project management and operational stability, enabling efficient coordination of construction activities.
| Key Component | Description |
| Project Administration | Defines roles and responsibilities, decision-making processes, communication channels, and the chain of command for project execution. |
| Project Schedule | Outlines start and completion dates, milestone deadlines, and potential penalties or incentives related to the schedule. |
| Payment Terms | Includes payment schedules, invoicing procedures, and retainage terms necessary for project cash flow management. |
| Site Management | Covers temporary facilities (trailers, offices), security measures, safety protocols, and waste removal services essential for site operations. |
| Project Management | Encompasses supervision costs, expenses for project managers and field office staff, and other overhead costs related to onsite management. |
| Material Handling | Accounts for equipment rentals and labor costs involved in material delivery, protection, and staging on the job site. |
| Calculation Methods | General Conditions are typically calculated as either a percentage of the total project cost or a lump sum included in the project bid for operational expenses. |
Examples of general conditions construction costs
Here are a few expenses commonly placed in the general conditions category. This is not an exhaustive list, mind you. The general conditions category can include many hundreds of expenses. However, this list should give you an idea of what constitutes general conditions.
Pre-development fees
Construction companies typically put lots of effort into a given project before even receiving the contract. For example, staff prepares estimates and bids, both of which take considerable time.
Naturally, there are costs associated with these activities. The most obvious of these would be the staff’s salaries.
Administrative project costs
Of course, administrative tasks don’t end once the project begins. Away from the job site, staff members carry on with tasks such as payroll and addressing human resource concerns.
Without this work, the project would grind to a halt. However, because these costs are not directly related to manual labor on the job site, they’re classified as general conditions.
Project equipment and utilities
This category contains expenses such as dumpsters, fencing, temporary lighting, and site office utilities.
These costs differ from things like bulldozers and jackhammers, both of which might be absolutely essential for project delivery. The aforementioned general conditions, however, support the entire project in a more indirect sense.
Permits
If a project requires permits, these will also typically be lumped in with general conditions. Permit fees include any costs (including staff member salaries) incurred during the process of receiving the legal authorization required for work to commence.
Loan interest
When construction companies take on loans to cover project costs, the associated interest will typically be included among general conditions.
Taxes
Many taxable events typically occur during large-scale construction projects. These taxes – and any fees associated with handling them (i.e. accountant wages) fall under general conditions.
Project management
Construction project management is a term broadly describing a whole laundry list of activities that support work on the job site. There are seven areas of focus when it comes to construction project management:
- high-level
- financial
- time
- quality
- contract
- safety
- workforce
Each of these costs falls under the category of general conditions.
Public relations
Public-facing construction companies often incur costs associated with maintaining their reputations and other advertising-related concerns. These expenses meet the criteria of general conditions.
Worker accommodations, amenities, and additional compensation
Often, construction projects require workers to relocate or even just travel long distances to the job site. This category covers expenses related to that travel, including hotel bookings, compensation for gas, and air travel.
Job site setup and cleaning costs
Costs in this category cover the initial setup of a construction project along with the cleanup that happens once everything’s complete. These costs fall under general conditions.
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Why general conditions construction costs matter
General conditions can heavily influence a project’s financials. In fact, profitability may hinge on a company’s ability to create accurate general conditions construction cost estimates and incorporate those figures into their planning.
Take another look at the examples in the previous section. These aren’t necessarily minor costs, especially on larger construction projects. When companies don’t account for them, they may end up with a completely inaccurate understanding of their profit margins.
This can have devastating implications down the line. Say, for example, a construction company thinks they have a $5 million surplus on a particular project, unaware that $2 million of that figure is actually being eaten up by improperly-tracked general conditions.
The company could conceivably overextend itself by allocated those resources – which it doesn’t actually have – elsewhere.
How to Estimate General Conditions?
Estimating general conditions for a construction project starts with reviewing historical data from past projects of similar size, type, and duration. This provides a helpful baseline for what general conditions might cost. Next, break down general conditions into specific items, including costs for project management, temporary site facilities like offices or storage, safety measures, utilities, equipment rentals, permits, inspections, and site security. With this breakdown, estimate the project’s duration, as many general conditions costs depend on the length of time they’re needed.
Once the list is established, calculate the costs for each item based on either time or quantity. For instance, multiply the rate of time-dependent items (such as salaries) by the project’s estimated duration, while quantity-based items (like dumpsters) should be estimated by quantity needed, then multiplied by unit costs. To ensure your estimate remains accurate despite potential price fluctuations, consider using futures contracts for larger projects or materials tracking software that provides current price forecasts.
It’s also wise to include a contingency, typically between 5-10%, to cover any unexpected expenses. Add up all these costs to arrive at a total estimate for general conditions. Depending on the contract, you may express this estimate as either a lump sum or a percentage of the total project cost. Lastly, be prepared to justify the costs you’ve included, avoiding items such as staff bonuses or depreciation, which clients may not be willing to cover. Using construction estimating software can streamline this process, and by maintaining detailed records of actual general conditions costs from completed projects, you’ll improve the accuracy of future estimates.
Difference between general conditions and general overhead
It’s worth noting that general conditions differ substantially from general overhead.
You see, general conditions are attached to a specific project. General overhead, meanwhile, consists of expenses a company incurs as part of simply staying open (i.e. leasing office space and paying administrative staff, neither of which are attached to a specific job).
Here’s another way to think of it. General conditions are crucial for determining whether a project will be successful. General overhead, meanwhile, can help a company determine whether its entire operation is successful.
Tips for general conditions construction cost estimates
Next, let’s discuss some tips and best practices for ensuring your general conditions construction cost estimates are accurate.
Rely on data from past projects
Because general conditions can vary based on a project’s type, it’s crucial that you maintain reference points. You should be able to reference this data whenever you prepare general conditions construction cost estimates for similar projects in the future.
Of course, this all begins with appropriate tracking. From a resource management perspective, consider using software like our very own Bridgit Bench. This software will help you visualize resource allocations, which you can then use to determine how much capital is being allocated to specific tasks, including those that fall under the purview of general conditions.
Bridgit Bench also includes a forecasting feature that can help you project future needs, which you’ll find valuable for general conditions estimating.
Do your best to forecast fluctuations in pricing for materials and equipment
Here’s a general conditions estimate example.
Let’s say you’re looking to estimate the cost of job site fencing, which certainly falls into the category of general conditions. Months down the road, though, it’s possible the price of fencing may rise.
On large scale construction projects, companies may use futures contracts to secure very specific prices for materials and equipment. In other words, these contracts hedge against the possibility of those costs exceeding the strike price.
On smaller projects, companies may simply rely on building materials software that keeps track of prices across numerous vendors.
Whichever approach best meets your needs, it’s important you make an effort to forecast costs for items related to general conditions.
Be prepared to justify your general conditions
As you’ve probably noticed by now, the general conditions category contains relatively vague line items. As such, contractors are often asked to justify these expenses before a proposal is approved or reimbursement is issued.
You’ll have a much easier time getting your general conditions approved by:
- avoiding the inclusion of staff bonuses and other incentives; clients typically don’t want to pay for this
- being selective regarding listing equipment depreciation as a general condition; some clients may insist this constitutes general overhead
- ensuring the general conditions rates you quote are in line with market averages, even if you have alternative arrangements with suppliers
- maintaining records (including receipts) of transactions and passing those along with your requests for reimbursement
We hope this guide has helped you better understand the idea of general conditions as they relate to construction costs.
For more construction management explainers and tips, visit our blog.
General Conditions FAQ
What are general conditions vs general requirements in construction?
General conditions cover the essential costs needed to manage and support a construction project, while general requirements define project objectives and standards. Essentially, general conditions are about management expenses, and general requirements focus on the project’s operational framework.
How do general conditions affect the overall project budget?
General conditions can make up a significant portion of a project’s costs, usually between 5-10%. They are crucial for maintaining an organized job site, and clients may request documentation to validate these costs throughout the project.
What percentage of total project costs should general conditions represent?
Typically, general conditions account for around 5-10% of a project’s total cost, though this can vary based on project size, complexity, and specific needs at the site.
How can general conditions be adjusted for different project phases?
Adjusting general conditions by project phase involves evaluating needs such as site supervision, rented equipment, and temporary facilities, then calculating costs accordingly. Each phase should reflect its unique requirements and projected duration.
What documentation is required to substantiate general conditions for client approvals or audits?
To verify general conditions, it’s helpful to have records such as timesheets, invoices, permits, and inspection reports. These documents ensure transparency and justify the costs that are indirectly tied to the project.
