The infrastructure that is put in place allowing work to be performed is referred to as General Requirements Costs (also referred to as General Conditions). General conditions are costs that most contractors fail to consider or recognize. Whether you are a general contractor or subcontractor, these costs translate to the funds required to conduct construction operations. For example, you must have a superintendent on the job site to coordinate the work that will occur. The project-specific overhead cost, otherwise known as general conditions, not only requires a superintendent but also other basic project infrastructure like restrooms, conference tables, etc. There is no cookie-cutter way of determining industry-wide general requirements costs; these are project-specific, taking into consideration the size and scope of the project. With consideration of all the variables, each project will have a different requirement for leadership and infrastructure. Let’s consider the following simplified example. According to OSHA, you are required to have one (1) portable sanitary facility per every 25 people. If your project is small, you may only have one (1) of these facilities. However, if your project has 100 people, you will need four (4) portable sanitary facilities. Because the scope of each project is different, the associated general requirements costs will be different.
Every company will carry out its operations in a slightly different manner than others. Consider the leadership found on the job site; this will differ from company to company so the methodology for dealing with general conditions may be different. One company may have many small projects with one superintendent and another company may run a large project with multiple superintendents. It all depends on how a company plans to staff and execute a project, for which there really are not any norms. Personally, I’ve carried out a $1M retail project requiring one (1) superintendent as well as a $29M project only requiring two (2) superintendents.
When analyzing general conditions and needs for a specific project, it is important to know the skill set of the superintendent along with the company-specific requirements. There are standard general conditions costs like a job site trailer which have a fairly standard monthly rate. Using costs recaps from previous projects can give you an estimation of what you may need, but it is also important to solicit the information you need in order to anticipate the future costs a project may incur. A job site requires truly project-specific and company-specific costs, and only through analysis can you develop a plan to estimate a project effectively. With the known project-specific guidelines, an estimator can develop general requirements costs by using a standard spreadsheet of costs. This will attribute to a standard set of general costs for every project based on a norm. Whether that is $20,000 a month in general requirements costs for every project under $5M or a weekly line-item cost such as a superintendent at $1,500 per week. While these are just a few examples of general requirements costs and how they can be applied to a project estimate, the takeaway is that these will always differ based on project- and company-specific requirements.