By AIA Contract Documents
August 16, 2023
“General conditions costs” is a frequently used term in the construction industry, but the exact meaning, and related scope of coverage, can vary based on a variety of factors. In construction, this term generally refers to indirect costs that are incurred during performance of work, such as expenses associated with the management, administration, and coordination of the project. Typically, contractors include general conditions costs in their estimates to cover their operational expenses and project-related services when bidding or negotiating agreements.
General conditions costs can widely vary depending on the project size, complexity, location, scope of work, and other factors. Article 7 of A102™-2017, Standard Form of Agreement Between Owner and Contractor where the basis of payment is the Cost of the Work Plus a Fee with a Guaranteed Maximum Price identifies a variety of general conditions costs. Here are some common items that are typically included in a general contractor’s general conditions costs:
Using data from previous projects, contractors may establish a standard set of general conditions costs as a baseline for their projects. This baseline forms the foundation of a new project’s estimate or bid. General conditions costs are typically calculated as a percentage of the total project cost or included as a lump sum in the project bid.
AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.