How much should general conditions cost?
Determining the appropriate cost for general conditions in a project can be a challenging task. General conditions refer to the expenses that are not directly related to the specific work of the project but are essential for its overall execution. These costs can include various elements such as insurance, permits, temporary utilities, and other administrative expenses. The question of how much general conditions should cost is crucial for both contractors and clients, as it directly impacts the profitability and feasibility of the project. In this article, we will explore the factors that influence the cost of general conditions and provide some guidelines to help determine a reasonable amount.
Factors Influencing General Conditions Cost
1. Project Size and Complexity: The size and complexity of a project play a significant role in determining the cost of general conditions. Larger projects with more intricate designs and multiple phases typically require more administrative efforts, leading to higher general conditions costs.
2. Location: The geographical location of the project can also impact the cost of general conditions. In regions with higher labor and material costs, the overall expenses may be higher. Additionally, projects located in remote areas may require additional transportation and logistics costs.
3. Duration: The duration of the project can affect the cost of general conditions. Longer projects may require more administrative work, such as extended insurance coverage and permit renewals, which can increase the overall expenses.
4. Regulatory Requirements: Compliance with local, state, and federal regulations can add to the cost of general conditions. Projects that require additional permits, inspections, or certifications may have higher expenses due to the time and resources needed to meet these requirements.
5. Contingency and Risk Management: Including contingency and risk management costs in general conditions is essential to ensure the project’s success. These costs cover unforeseen events and can vary depending on the project’s nature and the level of risk involved.
6. Client and Contractor Agreements: The terms and conditions of the client-contractor agreement can also influence the cost of general conditions. Some agreements may require the contractor to bear certain costs, while others may allocate them between the client and the contractor.
Guidelines for Determining General Conditions Cost
1. Historical Data: Reviewing historical data from similar projects can provide a baseline for estimating general conditions costs. Analyzing past projects’ expenses can help identify trends and adjust the costs accordingly.
2. Industry Benchmarks: Researching industry benchmarks and standards can help determine a reasonable range for general conditions costs. This information can be obtained from trade associations, industry publications, and professional networks.
3. Expert Consultation: Consulting with industry experts, such as project managers, cost estimators, and construction professionals, can provide valuable insights into determining the appropriate cost for general conditions.
4. Detailed Breakdown: A detailed breakdown of the various components of general conditions can help identify specific costs and allocate them appropriately. This approach ensures that no essential expenses are overlooked.
5. Regular Reviews and Adjustments: As the project progresses, it is essential to regularly review and adjust the general conditions cost to account for any changes in the project scope, schedule, or other factors that may impact the expenses.
In conclusion, determining the appropriate cost for general conditions in a project requires careful consideration of various factors. By analyzing historical data, industry benchmarks, and expert opinions, and regularly reviewing the costs, contractors and clients can ensure that the general conditions cost is reasonable and aligned with the project’s needs.
