General conditions are the costs of running and supervising a construction site that aren't tied to any single trade, such as a site manager's salary, temporary power and water, site offices, and project insurance. They sit apart from the direct cost of labour and materials in a budget, but they are a real project cost, usually priced as their own line item or a percentage of contract value in a bid.
Two related meanings
The term covers two related things. As a cost category, it means the site overhead described above. As a contract term, "General Conditions of the Contract for Construction" is also the title of AIA Document A201, the standard set of boilerplate terms many US construction contracts use for how changes, payments and disputes are handled. The two share a name because site overhead was traditionally described in that section of the contract.
A worked example
A $3 million commercial fit-out budgets general conditions at 8% of contract value, or $240,000, covering a site superintendent for 10 months at $12,000 a month ($120,000), a site office with temporary power and water at $60,000, builder's risk insurance at $30,000, and site administration at $30,000. A two-month schedule extension then adds two more months of superintendent and site office cost, pushing actual general conditions spend to about $264,000, a $24,000 overrun that lands on this line rather than on any single trade's cost.
Where general conditions show up in a budget
General conditions are usually set up as their own Cost Code or group of codes in the budget, separate from labour and material costs, so site overhead can be tracked and reported on its own. Because much of it is time-based rather than tied to a quantity of work, a delay to the programme shows up directly as a general conditions overrun, which is one reason it's worth watching alongside the schedule.
Related terms: Indirect Costs, Lump Sum Contract, Mobilization Cost, Preliminary Costs.
In Planyard, general conditions are set up as their own cost codes in the budget, so site overhead is tracked and reported separately from trade costs instead of being folded into them. See construction budget software.
FAQs
Are general conditions included in the overall project budget?
Yes. They're part of the total project cost, but they're normally broken out as their own line or cost code rather than spread across the trade costs, so they can be tracked on their own.
How can contractors reduce general condition costs?
Mainly by keeping the programme on track, since much of the cost is time-based, and by sizing site staffing and temporary facilities to the actual scale of the job instead of a standard setup.