By The Numbers: General Conditions - Important Costs

Some contractors may be covering these items in general or administrative overhead. If so, accounting for them is done by percentage. General costs vary too much from job to job to be costed by percentage. Contractors can distinguish general costs very easily, so count and cost them, reason them through, and estimate them on a job-by-job basis.

DEFINING CONDITIONS. What are the general condition items that should be estimated on a job? General conditions are overhead type items that are not applicable to the company as a whole. They can be applied to particular jobs in a reasonable fashion because they are only needed for one particular job.

I like to think of general conditions as job overhead. General conditions are things that cost a contractor money on a job but are not a part of the finished product the customer will have when completed. The contractor pays for them while doing the job, but leaves them when the job is done. For example, portable toilets are general condition items, that cost money on a monthly basis, but are not a part of the finished product.

In a set of specifications, it is very easy to see what general conditions are. Every set of specifications is broken down into three major divisions. There is the proposal or bid division in the front of the book. In the back of the book, there is a large section that details technical specifications. This section gives details of how to put a project together and the kind of materials that will be required to be installed. Between those two sections are two other sections called general conditions and supplemental general conditions. In those sections are thousands of dollars worth of items that will cost money on the job, and that must be provided to complete the project.

Here is a list of some of those items. For the first seven items listed and numbered, a more detailed discussion will follow the list.

1. Supervision

2. Mobilization

3. Clean up (Daily)

4. Toilets/Job Offices

5. General Job Equipment

6. Gophers

7. Temporary Water

Trailers (Office and Storage)

Dumpsters/Storage Yards

Temporary Fencing

Barricades/Flag Persons

Tests/Engineering

Pedestrian Ramps

Special Insurance

(i.e. Contractor’s Risk)

Plane Fare for Out-of-Town Jobs

Job Signs/Safety Requirements

Transporting Material to Job Site

Temporary Electricity

Punch List Items

As-Built Drawing

Photographs of Construction

Per Diem to Key Employees

Job Crane

Special Job Material

Actually, this list could go on and on because it will vary on each job. The key is that contractors recognize the importance and the costs of these items on a job-by-job basis.

I estimate labor for each function based on actual production times. So, I need to pick up unproductive times such as times of job layout, organizing the workers, meetings, phone calls, paperwork time, etc., somewhere else. I do that in the supervision category of general conditions.

SUPERVISION. I figure supervision in two ways. If I am a general contractor, I put in the number of people (one, one and a half, two, etc.) who will be needed to supervise for the duration of the project. If I am a subcontractor or specialty contractor doing smaller jobs, I figure the amount of days I will have people on the job. For instance, let’s say I have 200 man hours on the job with a five-man crew working eight hours a day. That is 40 hours per day. Consequently, I will have people on the job for five days. Then, I estimate how many hours I will spend in supervisory tasks per day if I am running the job. If I feel I would be supervising for three hours per day for five days, I would put 15 hours of supervision in general conditions.

MOBILIZATION. Mobilization is time spent transporting equipment to the job and the set up any trailers, fences or storage yards. It will also include the takedown procedure after the job is completed. Again, I estimate the distance, traffic conditions, and/or unique difficulties in getting to the job. Then, I put in the hours for the labor and equipment to perform that function.

This item also comes into play if a contractor is paying gas time or drive time for workers to and from (or between) projects. If so, multiply the number of people paid by the amount of time to get to the project from the office, multiplied by one or two ways, multiplied by the number of days expected to be on the project will provide the mobilization hours.

DAILY CLEAN-UP. Every day crews stop early to put away tools and clean up work areas. Sometimes, there are not many tools and the work areas need little cleaning. Other times, the crew uses a lot of tools and small materials or there are sidewalks, curbs, gutters and asphalt to sweep and clean every day. That’s why I like to estimate this as a separate item.

Again, the number of employees cleaning up (usually all of them) multiplied by the amount of time to clean up, multiplied by the number of days on the job will total the cleanup time.

TOILETS/JOB OFFICES. I remember bidding a job once that was three miles long and ran on each side of a small town. When I bid that job, do you know what I saw? I saw a person working on the far end of that job having to go to the restroom. I saw him or her get in a truck, drive through town (stopping at every red light on the way) to the toilet, which was at the designated yard and staging area on the other side of town. Then I saw the employee use the toilet, drive back through town and stop at a 7-Eleven to get a Big Gulp so they would have to go to the bathroom again. Then he or she drove the truck back to the job site.

And do you know what I saw when the employee got back to the job? Another person got in the same truck and went through the same procedure all over again. We could have had one truck busy solely as a potty truck. So, when I saw this, I estimated for five toilets and put them up and down that job in proximity to where the crews would be working. That was unique to that job, but, because I was estimating item by item, I could pick the cost up.

GENERAL JOB MANAGEMENT. I estimate for equipment in two places. I put general job equipment in general conditions. This is the kind of equipment that is going to be at the job every day. Pickup trucks are general job equipment. Skid steer loaders, tractors and generators can be general job equipment if they are going to be on the site for an extended period of time. I put them in for that time. If the equipment does not fit that way, I estimate it as specialized equipment with the function it will perform.

GOPHERS. Gophers are people who go for this or go for that. Some companies have a gopher in general overhead because they have someone who does that sort of thing throughout the company. It might even be the owner of a company. But some jobs require that kind of person on a full- or part-time basis on that particular job. That job may be outside of the city in which the company is located or it may be of the size or nature that requires such a person just for that job. Again, I estimate that person’s time by multiplying the amount of hours spent per day gophering by the number of days that will be spent on the job.

TEMPORARY WATER. In order to provide a feel for the magnitude of some of these items, I want to share an experience of mine concerning this particular item. I remember estimating and getting a site-development job for a contractor who required us to maintain a large acreage of grass for 30 days. No sweat.

I saw that requirement in the technical specifications and included in my estimate two men for 30 days to maintain the area. On the thirtieth day, I met the owner’s representative to sell him the job. After we shook hands, he gave me a bill from the local water company. It was addressed to our company and it was for several thousand dollars.

I asked, What is this? The owner’s representative opened the specifications to a pre-marked page and showed me these highlighted words in the general conditions: Contractor will pay for water during construction. This project was on a water meter. Thousands of dollars of water had been consumed to run the irrigation system day and night to bring up acres of turf.

Well, we tried to fight the bill, wrote letters, screamed and hollered, but after months of no resolution, finally paid it. Seven little words in the general conditions cost us thousands of dollars.