What Are General Conditions in Construction?

Understanding what makes a construction project run smoothly isn’t just about materials, manpower, or machinery. It's also about the systems that hold everything together behind the scenes. That’s where general conditions come in. They define how a job is managed, how responsibilities are assigned, and how day-to-day operations are structured. But just as important, and often confused, are general requirements, which focus on the specific needs and logistics of the job site itself.

This guide breaks down the difference between the two, explains what is included in general conditions, and explores how they’re calculated, documented, and managed throughout the life of a construction project. You’ll also learn how smart planning—backed by AI construction contract management software tools—can help avoid common pitfalls such as underestimating costs or mismanaging change orders.

Whether you're a contractor, owner, or consultant, this breakdown will give you the clarity you need to align your team, protect your budget, and deliver projects more efficiently.

What’s the Purpose of “General Conditions” in a Construction Contract?

The purpose of general conditions in a construction contract is to establish a standardized system for managing the project from start to finish. While each construction job differs, the underlying administrative and legal structure must be consistent to avoid delays, miscommunication, or conflict. General conditions provide that structure by defining how the work will be coordinated, how costs will be controlled, and how risks will be shared.

At a practical level, general conditions ensure that everyone involved knows what’s expected, when it’s required, and who’s responsible. This helps contractors manage subcontractor relationships, timelines, payments, and documentation. For owners, it offers transparency into how progress is tracked, how decisions are made, and what recourse is available if things go off course.

By creating clear administrative procedures and assigning accountability upfront, general conditions allow the project team to focus on execution instead of resolving constant misunderstandings. These terms also reduce the likelihood of litigation by predefining how disputes are handled, how notices are issued, and how contractual changes are reviewed.

Categories of General Conditions for Contractors

The list of general conditions in construction outlines the foundational responsibilities and cost categories that apply across nearly every job, regardless of project type or scope. Unlike material specs or trade-specific work, these items support the infrastructure of construction management itself. They help ensure the project runs efficiently, remains legally compliant, and stays on schedule from mobilization to final walk-through.

Though some specifics vary based on contract format or delivery method, most general conditions cover staffing, compliance, insurance, and dispute procedures. Below is a breakdown of the core components.

Project Administration

At the core of any well-run construction project, there is an organized, and experienced project management team. General conditions often cover the non-trade personnel who ensure the job progresses as planned, including project managers, superintendents, assistant PMs, schedulers, and admin support.

These individuals don’t swing hammers or pour concrete but are instrumental in scheduling subcontractors, resolving issues, keeping documents in order, and maintaining quality standards. Their work ensures smooth communication across teams, logs changes, and minimizes delays—all essential for staying on track. Here are some general examples:

Role or Expense	Included in General Conditions?	Notes
Project Manager Salary	Yes	Covers full-time or part-time PMs assigned to the project.
Scheduling Software	Yes	Includes licenses for tools like MS Project or Procore.
Administrative Staff	Yes	Office managers and project admins handling paperwork.
Field Supervision	Yes	Superintendents, foremen, or safety supervisors.
Travel & Lodging Expenses	Sometimes	May be included if the site is remote or long-term.

Site Management

Construction sites need more than tools and labor. They need organized systems, safety infrastructure, and physical resources to stay functional. Site management costs in general conditions typically involve temporary facilities, fencing, utility hookups, dumpsters, signage, and portable restrooms.

This category ensures that everything outside the actual construction work—like maintaining a safe, clean, and accessible jobsite—is accounted for. It's particularly important on larger sites with multiple subcontractors and complex logistics. Here are some general examples but there are many other scenarios:

Site Item or Service	Covered Under General Conditions	Description
Temporary Utilities	Yes	Electrical, water, and telecom setup for the site.
Site Fencing & Barriers	Yes	Security fencing to control access and comply with safety codes.
Jobsite Trailers & Offices	Yes	Portable structures used for admin, meetings, and storage.
Dumpsters & Waste Disposal	Yes	Costs related to daily site cleanup and debris management.
Jobsite Safety Signage	Yes	Required notices, directional signs, and hazard markings.

Permits, Licenses, and Regulations

No construction project can move forward legally without the right permits and licenses. General conditions often budget for these compliance requirements, the time needed to obtain them, and address any regulatory reviews. This includes local building permits, zoning clearance, fire marshal approvals, environmental impact assessments, and more.

The process varies by jurisdiction, but it's almost always time-sensitive. Delays in obtaining permits can create ripple effects that push timelines back or trigger penalties, so this category must be managed proactively. Here are some general examples, but they can often and should be more precise:

Item	Covered Under General Conditions	Additional Notes
Building Permits	Yes	Core requirement for all vertical construction.
Zoning Approvals	Yes	Especially important in mixed-use or historical districts.
Utility Connection Fees	Sometimes	May be handled separately depending on scope.
Environmental Compliance	Yes	Includes soil reports, asbestos surveys, etc.
Code Inspection Scheduling	Yes	Time and coordination effort required for code officials.

Insurance and Bonds

Insurance and bonding costs are typically non-negotiable and a legal requirement before work begins. These provide financial protection for all parties in the event of property damage, worker injuries, default, or non-payment. They’re especially critical on public projects, where performance guarantees and payment assurances are enforced by law.

General conditions usually account for the procurement and ongoing cost of coverage, including periodic renewals or adjustments based on the scope of work. Here are some general examples:

Coverage Type	Included in General Conditions	Explanation
General Liability Insurance	Yes	Protects against third-party bodily injury or property damage.
Performance Bonds	Yes	Guarantees completion according to contract terms.
Payment Bonds	Yes	Ensures subcontractors and suppliers get paid.
Workers’ Compensation	Yes	Required in most states for jobsite injury coverage.

Changes in Work

Change orders are an expected part of construction, but the administrative load they bring isn’t always visible. General conditions often include time and resources for evaluating, pricing, and implementing these changes, from revising drawings to updating cost schedules.

This process requires careful documentation and clear communication, especially when the change impacts scope, cost, or duration. Here are some general examples:

Activity	Included in General Conditions	Purpose
Change Order Pricing	Yes	Estimating additional costs or credits.
Drawing Revisions	Yes	Updating design documents to reflect changes.
Contract Amendments	Yes	Legal paperwork required to authorize the change.
Scheduling Adjustments	Yes	Reflects changes to project milestones or timelines.
Stakeholder Coordination	Yes	Meetings and communication to confirm impact.

Payment Terms

How and when money moves on a jobsite can make or break a project. General conditions typically outline the payment process in detail, including timelines, documentation standards, and retainage. This ensures transparency and protects against delayed or incomplete payments.

Contractors also need to prepare and submit pay applications, which require time, accuracy, and approvals, making it a part of project admin, and therefore, general conditions. Here are some general examples:

Item	Included in General Conditions	Notes
Payment Schedule	Yes	Sets timing (e.g., monthly, milestones).
Retainage Percentage	Yes	Amount withheld until project completion.
Pay Application Prep Time	Yes	Admin hours needed to compile and submit.
Required Backup Documents	Yes	Includes lien waivers, invoices, etc.
Approval Process Timeline	Yes	Tracks when payments are reviewed and released.

Dispute Resolution

Construction involves multiple moving parts, and disputes over scope, delays, or payments can arise. Dispute resolution clauses in the general conditions define how conflicts are addressed, whether through negotiation, mediation, arbitration, or court proceedings.

These mechanisms are designed to limit disruptions and reduce legal risk. Including them in the general conditions section gives all parties a standard reference when challenges arise. For teams using platforms like Procore, these workflows can be automated and tracked in real-time, reducing the chance of missed steps or miscommunication.

Resolution Type	Included in General Conditions	Typical Use Case
Negotiation	Yes	Preferred first step before formal action.
Mediation	Yes	A neutral third party helps reach a compromise.  Not legally binding.
Arbitration	Yes	Legally binding but less formal than court.
Litigation	Yes	Last resort for major disputes.
Dispute Review Board	Sometimes	Used in large infrastructure or public jobs.

Closeout Requirements

As the project reaches completion, a structured closeout process ensures all loose ends are tied up. General conditions typically define the documentation, approvals, and warranties needed to complete the job and transfer responsibility to the owner officially.

It’s not just about finishing the physical work. It’s about proving everything is complete, correct, and ready for long-term use.

Closeout Item	Included in General Conditions	Description
As-Built Drawings	Yes	Reflects final installation details.
Punch List Completion	Yes	List of final tasks or fixes required.
Warranty Submission	Yes	Covers workmanship and materials.
System Training for Owner	Yes	Walkthroughs for HVAC, electrical, etc.
Final Lien Waivers	Yes	Confirms all parties have been paid.

How Do You Calculate General Conditions for Construction?

Calculating general conditions isn’t a one-size-fits-all process. These costs vary depending on the project size, duration, delivery method, location, and even the contractor's experience level. This category is especially tricky because general conditions often don’t relate to specific trades or scopes of work, yet they’re essential for the project to function.

Generally, general conditions are usually estimated as either a fixed cost, a percentage of the total construction cost, or a combination of both. For example, a contractor might apply a flat monthly fee to cover site supervision, trailers, and admin staff, then add a percentage-based estimate for items that fluctuate over time.

The key is to match the general conditions budget to the real operational needs of the job. A high-rise urban build will have vastly different logistics and staffing requirements than a suburban warehouse. Overlooking those nuances can cause a contractor to overestimate and lose bids or underestimate and eat costs.

What to Consider When Calculating General Conditions

A contractor should consider fixed and variable components when developing the general conditions estimate. Fixed costs include salaries for key personnel and rented equipment. Variable costs may include utility bills, fuel, security, and temporary services that can change with the duration of the job or weather.

Here are some of the most important factors to evaluate:

• Project Duration: The longer the project, the more you'll spend on monthly costs like site trailers, dumpsters, and admin staff.
  
  
• Project Complexity: Highly regulated, multi-phase, or downtown urban projects may require additional oversight, staging, or logistics.
  
  
• Location: Remote sites can introduce higher transportation and housing costs. Urban sites may demand extra security and space planning.
  
  
• Contract Type: Lump sum, cost-plus, or Guaranteed Maximum Price (GMP) contracts all influence how much detail is needed in budgeting general conditions.
  
  
• Owner Requirements: Some owners mandate additional documentation, meetings, or reporting, which increases the admin workload.

 Fixed vs. Variable General Conditions

Type	Common Examples	Budgeting Approach
Fixed Costs	Salaries, trailers, insurance, bonding	Monthly or lump sum
Variable Costs	Utilities, waste removal, temporary fencing	Based on schedule or allowances

When contractors take the time to analyze the project's real needs, their general conditions estimate becomes a tool, not just a line item. It protects profit margins, ensures administrative coverage, and allows for more transparent negotiations with the project owner.

Common Issues to Avoid with General Conditions

Even seasoned contractors and owners can make costly mistakes when managing general conditions. These issues often stem from poor forecasting, limited oversight, or assumptions that don’t hold up once the project is underway. Left unchecked, these missteps can erode profit margins, create billing disputes, or strain the relationship between stakeholders.

Being proactive and learning from common pitfalls is essential — especially since general conditions tend to be one of the least understood and most underestimated sections of a construction budget.

Underestimating

The most frequent and damaging issue is underestimating general conditions during the bidding or preconstruction phase. This often happens when estimators rely on flat percentages or templates without truly assessing the logistical needs and challenges of the specific job.

Failing to accurately account for the number of site staff, project duration, extended permit processes, or site access limitations can result in significant losses. Once the contract is signed, there’s little opportunity to recover those overlooked costs unless change orders or contingencies are triggered.

In highly competitive markets, contractors may intentionally keep general conditions low to win the bid, a risky move that can backfire midway through the job. In the long run, transparency and precision are more valuable than being the lowest number on the page.

Change Orders

Change orders are part of nearly every construction project, but how they’re managed is what makes the difference. A common mistake is not building in enough administrative support within the general conditions budget to track, evaluate, and document changes properly.

Each change order can affect the budget, scope, and duration of administrative work required. Contractors may rush through pricing or miss paperwork without enough bandwidth, leading to payment delays or even legal disputes.

Additionally, failing to log time extensions or schedule updates tied to change orders can undermine claims later in the project. An adequately structured general conditions section allows room to manage these moving parts with discipline.

Poor Monitoring

General conditions aren't a set-it-and-forget-it category. They require ongoing oversight and real-time adjustments as the project evolves. One common issue is failing to track actual general condition expenses against the original budget, which makes it challenging to catch overages early.

Without proper monitoring, contractors might continue to staff the project at full capacity even as the workload decreases or keep temporary services running longer than needed. These decisions seem small day-to-day but can significantly inflate costs over a multi-month project.

Transparent internal reporting systems and regular reviews help ensure that general conditions are used intentionally, not just passively incurred. Contractors who treat this category with the same attention as trade work tend to manage more profitable and organized projects.

Final Thoughts on General Conditions in Construction

General conditions are often hidden in plain sight—essential to every construction project, yet frequently misunderstood or underestimated. They aren’t just administrative overhead; they are the framework that keeps the project organized, compliant, and moving forward. These elements define how a construction contract operates in the real world, from staffing and site setup to insurance, change orders, and dispute resolution.

When clearly defined, accurately budgeted, and carefully monitored, general conditions help prevent delays, reduce legal risk, and keep stakeholders on the same page. The distinction between general conditions and general requirements may seem subtle, but understanding it ensures better cost control and clearer responsibilities throughout the job.

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