What to Know About The "General Conditions" When Building Your Custom Home
General Conditions, sometimes referred to as “construction soft costs” are fees the owner pays to the General Contractor for administration and management of the project. General conditions are often confusing to owners because the costs cannot be seen in built product. Examples of items in the General Conditions are salaries of employees on the job, job site trailers, and site fencing just to name a few. We will go into more examples below.
In the contract for construction, the General Conditions should be shown as a subcategory in the total cost of construction. If the contractor is using the customary CSI Master Format, the general conditions should be in a subcategory labeled “Division 01.”
Based on past projects, it is not unusual for the General Conditions, overhead, and profit to be 20-30 percent of the overall budget. As Architects, it is important for us to inform our clients of these costs at the beginning of the project. Knowing that a large portion of the owner’s budget will need to be set aside for General Conditions helps us to design the project within budget.
Salaries for the General Contractors team makeup a significant portion of the General Conditions
Fees included in the General Conditions include the contractor’s management for the project both on and off the project site. For a large custom home, this will often include a project manager, site superintendent, project engineer and possible an assistant or junior project manager. The salaries for these individuals will be passed through to the owner (with a markup) in the General Conditions.
Off-Site General Conditions Fees
Project accounting will typically also be included in the General Conditions. Each month the contractor’s accountant will generate an invoice for the costs that month. Compiling paperwork/receipts, tracking costs and generating the invoices will be done by the contractors accounting group and the fees for this task will be paid for in general conditions.
If a contractor provided pre-construction services on a project, these will often be billed under general conditions.
On-Site General Conditions Fees
Temporary utilities, office trailers, erosion control methods, dumpsters, trash removal/cleanup, site fencing, finish protection, equipment rental are all examples of “on-site” fees that may be included in the General Conditions.
Finish protection is incredibly important on a job. The plastic coverings, cardboard and tarps used to protect finishes is money well spent and should be included in the contractor’s General Conditions.
Another large line item that could be included in General Conditions is the builder’s risk and general liability insurance policies and any bonding required for a project. We always recommend our clients that to obtain copies of the contractors insurance certificates prior to engaging in a contract.
There are often many other General Conditions fees, these will vary based on each unique project. We recommend going through each item in the General Conditions thoroughly prior to agreeing to a contract. Working with an Architect familiar with the General Conditions costs in your area is a great way to keep your costs in check.
