Better Estimating Requires Close Attention to General Conditions
One thing I’ve noticed about estimating over the years is that general conditions are not always broken out per job by contractors. Insurance is one example as it will often be included in overhead. But, when it comes to figuring out job profitability it’s pretty tough to do when numbers like those are not broken out by the job. This is especially true when certain jobs require special insurances related to things like hazardous materials abatement.
Then too there are many things that fall under general conditions that if not tracked in that category may be just overlooked with their costs coming out of other items. When this happens the other items can all of a sudden show up running negative. Then someone has to investigate why that’s happening. For many small contractors that calls for time they don’t have so job profitability per job starts becoming less clear. Plus, because the item wasn’t budgeted for it wasn’t included in the cost to the owner and so it’s a cost that will just not be paid for.
You can get pretty detailed in general conditions. For example, have you ever considered the cost of job layout? On a foundation for example someone has to take the time to check elevations, dimensions and squareness and set things up so the actual work can begin. If there isn’t money allocated to that function then it just has to mysteriously appear from other categories. Another area is signage. Many times the owners, funding bank, architects and others require signs to be posted. Most times this falls to the GC because she has the people on site who can do that type of thing relatively quickly and easily. Still shouldn’t that cost be accounted for upfront so the GC can recover it?
It would probably be eye-opening to see the dollar amount of free work contractors regularly perform because they don’t adequately think through all of the potential general conditions and account for them in their bids.
This fictitious estimate for a $600,000 (8000 square foot) office building shows the myriad of items that can typically be allocated to general conditions. Other items include: equipment rental; concrete pumping; temporary enclosures; scaffold and personnel lifts and temporary structures and more.
