What are General Conditions in Construction?
What are general conditions in construction? The answer depends on who is using the term and which document they are holding. The phrase shows up in three different places on a typical project. Each one means something different, which is why the term confuses so many first-time owners.
Here is a quick overview of the three types:
- General Conditions of the Contract for Construction: The standard rulebook that governs how the owner, contractor, and architect work together.
- General Conditions in the construction estimate: The job overhead costs a contractor needs to run the project site.
- Supplementary General Conditions: Project-specific additions, deletions, or changes to the standard rulebook.
This guide briefly explains all three. The main focus is the second meaning, general conditions as job overhead. That is the version that shows up as a dollar figure in your bid, so it has the most direct impact on your budget.
The Three Types of General Conditions in Construction
General Conditions of the Contract for Construction
This is a legal document, not a cost. It sets the ground rules for the entire project. Most owners never write one from scratch. Instead, they use a standard industry form.
The most widely used form is the AIA A201, published by the American Institute of Architects. Other standard families exist too:
- ConsensusDocs: A contract family developed by a coalition of industry groups, including contractors and owners.
- EJCDC: Forms common on engineered projects such as water plants, roads, and other public infrastructure.
Whichever form is used, the General Conditions of the Contract typically cover:
- The roles and responsibilities of the owner, contractor, and architect
- How the contractor requests payment and how the owner approves it
- How changes to the work are requested, priced, and approved
- Insurance and bond requirements
- How disputes are resolved
- When and how either party can end the contract
Think of it as the rulebook for the game. It does not tell you what is being built. It tells you how everyone must behave while building it.
General Conditions in the Construction Estimate
This is the money side of the term. In a contractor’s estimate, general conditions are the costs of running the job site. These costs keep the project organized, staffed, safe, and functioning from start to finish.
You may also hear these costs called job overhead, project overhead, or field overhead. They are covered in detail below.
Supplementary General Conditions
Standard contract forms are written to fit thousands of projects. No single project fits them perfectly. Supplementary General Conditions fill that gap.
This document adds, deletes, or modifies specific sections of the standard General Conditions. AIA even publishes a guide for writing them, called the A503. Common examples include:
- Raising insurance limits above the standard form’s requirements
- Setting a dollar amount for liquidated damages if the project finishes late
- Changing the percentage of each payment held back as retainage
- Adding local rules, such as work-hour limits or noise restrictions
- Deleting clauses that do not apply to the project
Because the supplementary conditions change the standard form, the two documents must always be read together. Reading only one gives you an incomplete picture of your contract.
What are General Conditions in Construction Estimates?
Most construction costs belong to a specific trade. Concrete, framing, plumbing, and electrical work each have their own price. Those are called direct costs of the work.
But a project also needs things that do not belong to any single trade. Someone must supervise the site. Workers need restrooms and drinking water. The site needs power, fencing, and daily cleanup. These shared costs are general conditions.
A simple comparison helps. Picture a large wedding. You pay the caterer, florist, and band for their specific services. You also pay for the venue, parking attendants, restrooms, and cleanup crew. Those shared costs serve everyone, but no single vendor owns them. General conditions work the same way on a construction project.
General conditions typically run between 5 and 12 percent of total construction cost. The exact figure depends on project size, schedule length, location, and complexity.
You may also see many of these items in the project specifications under Division 01, General Requirements. That section describes what the contractor must provide. The general conditions line in the estimate shows what those items cost.
Direct Job Overhead: What General Conditions Include
Direct job overhead includes every cost that can be charged to your specific project. These expenses are required to build the project, even though they are not part of any one scope of work. The main categories are below.
Project Staff Salaries
This covers wages for the contractor’s staff who are dedicated to your job. Payroll taxes and benefits are usually included too. Typical positions include:
- Project manager: Handles budget, schedule, subcontracts, and communication with the owner.
- Site superintendent: Runs daily field operations and coordinates the trades on site.
- Quality control staff: Checks that the work meets the plans and specifications.
- Safety staff: Common on larger projects, where a dedicated safety manager may be required.
If a staff member splits time across several jobs, only your project’s share should be charged.
Temporary Facilities
These are the structures and services that exist only while the project is underway:
- Rent for a job-site office trailer, including furniture and internet service
- Storage containers or sheds for tools and materials
- Portable toilets and handwashing stations
- Drinking water for workers
Job-Site Utilities
A building under construction does not have permanent utilities yet. The contractor must set up and pay for temporary service:
- Temporary electricity: Power for tools, lights, and the office trailer.
- Temporary water meter: Water for mixing, cleaning, and dust control.
- Temporary heat: Needed to protect materials and keep work moving in cold weather.
These costs cover the construction period only. Once the building is turned over, the owner takes over utility bills.
Permits, Fees, and Testing
- Building permits and plan review fees
- Specialized local licenses required to work in that city or county
- Mandatory environmental or safety testing specific to the site
Who pays for each item varies by contract. On some projects, the owner pays for permits or testing directly. Your contract should state clearly who carries each one.
Site Security
- Perimeter fencing and gates
- Security guards or camera monitoring
- Barricades to keep the public away from hazards
- Temporary lighting for safety and theft prevention
Photographs, Surveys, and Staking
- Progress photographs: A dated record of the work, useful for payments and disputes.
- Surveys: Confirm property lines, elevations, and the final location of the building.
- Staking: Marks where the building, utilities, and paving go before work starts.
Cleanup, Signage, and Temporary Protection
- Cleanup: Daily debris removal, dumpster rental, and a final clean before turnover.
- Signage: Project signs, safety warnings, and traffic or directional signs.
- Temporary protection: Coverings that protect finished floors, doors, windows, and fixtures from damage.
Winter Construction
Cold weather adds costs that a summer project would not have:
- Temporary enclosures around work areas
- Heaters and the fuel to run them
- Insulated blankets to protect fresh concrete or thaw frozen ground
- Snow and ice removal
Miscellaneous Site Contingencies
Construction sites are busy, and accidents happen. Many contractors carry money for damage that no single trade caused. Common examples include:
- Trimming trees to clear space for cranes or equipment
- Repairing damage to neighboring buildings
- Replacing broken windows
- Repairing a neighbor’s foundation undermined during excavation
- Fixing damage caused by workers or equipment
- Repairing sidewalks, curbs, and paved areas
Owners should ask how this contingency is handled. If the money goes unused, find out whether it returns to the owner.
Indirect Overhead: Costs That Are Not General Conditions
Every contractor also has costs that are not tied to any one project. These are called indirect overhead or home office overhead. They are shared across every job the company runs. Examples include:
- Main office rent and utilities
- Corporate payroll, such as executives, estimators, and human resources staff
- Accounting and legal fees
- Company-wide insurance, software, and marketing
Contractors recover these costs through their markup, often called overhead and profit or the fee. They should not appear in the general conditions line.
This matters most on cost-plus contracts. In those contracts, the owner often reimburses general conditions at actual cost, then pays a separate fee. If home office costs slip into general conditions, the owner pays for them twice.
Some items fall in a gray area. Vehicle allowances, cell phones, and staff who split time between jobs are common examples. Agree on how these are handled before the contract is signed.
How General Conditions Costs Are Priced
Most general conditions costs are driven by time. A superintendent is paid every week. Trailer rent and portable toilets are billed every month. The longer the project runs, the more these costs grow.
This is one reason delays are so expensive for owners. A two-month delay can add two months of general conditions to the final bill.
Other items are fixed costs. A building permit or project sign costs the same whether the job takes six months or ten.
Contractors usually price general conditions in one of two ways:
- Lump sum: One fixed price for all general conditions, often billed in equal monthly amounts. Simple to manage, but the owner does not see actual costs.
- Reimbursable: The owner pays actual documented costs. More transparent, but it requires more paperwork and review.
General conditions can also appear in change orders. If added work extends the schedule, the contractor may request additional general conditions for that time.
What Owners Should Ask About General Conditions
General conditions are a legitimate cost, and every project needs them. Still, owners should understand what they are paying for. Before signing, ask the contractor these questions:
- Can you provide an itemized breakdown of general conditions?
- How many months of project duration is this price based on?
- Who pays for permits, testing, and temporary utilities?
- Are any home office costs included in this number?
- How will general conditions change if the schedule changes?
- What happens to any unused contingency money?
Comparing general conditions across bids can also be revealing. A number far lower than the others may mean the contractor underestimated the schedule. It could also mean key items were left out. Either can lead to change orders later.
