By Michael B. Carringer, FCPE MC Cost Consulting, LLC 21320 Roland Cutoff Road

Roland, AR 72135 mcarringer@mccost.com

mccost.com © 1995 Michael Carringer

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Whether you are a material supplier, a subcontractor, or a general contractor, estimating general conditions is an integral part of a professionally prepared estimate. In the construction industry, the term “general conditions” may have two meanings: 1) Division One of the Project Specifications, and 2) “...any type of construction work or cost that is required to complete the project by either the general contractor or their subcontractors or vendors that are temporarily located at the site, do not normally become a permanent part of the work and therefore are usually not specifically addressed directly by the Specifications...” (American Society of Professional Estimators, Standard Estimating Practice, Second Edition). Estimates must address both of these elements. Estimating general conditions is one more important part of project risk analysis. Do you always look at (study) Division One of the Specifications? Do you always prepare a detailed estimate of the cost of general conditions? If not both, you may be courting disaster. The subcontractor who fails to note that this project is subject to a $10,000 per day liquidated damages clause -and fails to exclude those from his bid is taking a big risk. Whether you bid public work, private work, or a combination of the two, the following discussion applies to your estimate. There are a number of key elements in estimating general conditions. They Include: 1. Condition of the Documents 2. Condition of Division One 3. Duration of the Project (Schedule) 4. Project Staffing and Support Required 5. Method of Accomplishing the Work 6. Other Considerations

CONDITION OF THE DOCUMENTS Are the documents complete? Are they legible? Do you have all the sheets of plans and specifications? When you are investigating something, do you find the answer in the documents, or do you have to guess? Remember this -- if an estimator can't find it, the field probably can't build it. Will you have to have extra staff just to clarify the documents so that construction can proceed? All too often, designers, probably because of the low fees they are paid, are forced to show only what is necessary to bid the job, figuring that the GC will ask for additional information to build, and responding to those requests for information will take less overall time than preparing a truly complete set of documents. As a consequence, we are getting some pretty incomplete drawings. In addition, the design profession is foisting more and more of the design onto the GC and sub, thus saving design man hours. When is the last time you saw a completely designed fire protection system? In some parts of the country, steel connection details are not shown, they are left to the sub or fabricators. In other areas, whole wall systems are shown only schematically, the design responsibility being given to the GC and sub. All these situations, and others like them, lead to increased risk for the GC or subs and should be carefully studied when estimating general condition costs.

CONDITION OF DIVISION ONE Do you read Division One thoroughly, marking up the Specs with important items as you go? Do you make notes for later referral? Do you look for a bid form to determine in what format your bid should be presented? Do you check to see that you have seen all addenda, even to the extent of calling about addenda just prior to bid day? Do you check for alternates? If you are a sub, do you talk to the GC about alternates to make sure you understand how the GC will be looking for his bid from you? If you are a GC, do you ask subs if they are aware of the alternates? Which documents govern when it comes to interpretation? The AIA documents? The Supplementary General Conditions? The plans? The Agreement? Any of the above may govern, depending upon how the Specifications are worded. The order of interpretation should always be given in Division One. If it is

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not, ask for a clarification. When disputes arise during the progress of the work, which document prevails, and in what order, can be crucial. Suppose 316 stainless steel is specified in the tank specifications for pipe to the tanks but galvanized pipe is shown on the plans. Which prevails'? Either may take precedence, it all depends on the order of precedence listed in Division One. And do not overlook that little paragraph which says, (all too often) “In case of conflict between the drawings and the specifications, the material or equipment of highest quality (read "highest price”) or greatest quantity will be used.” Does your review of Division One reveal whether the Owner or the GC pays for inspection and testing? Who pays for the building permit? What about plan check fees? What are the insurance requirements? What are the limits of insurance? Are the policies specified to be written on an occurrence basis? Do you have those limits in your policy, as a sub or GC? If not, can you get them? How much will it cost? Who is responsible for Builder’s Risk insurance? If the Owner provides it, what is the deductible? You may have to add money for limits you do not carry. Is the Owner's policy such that you must provide DIC coverage? What is the cost? What are the Indemnification clauses? Do they hold you responsible for everything, including owner's and designer's contingent liability? What are the payment clauses? Is there retainage? If so, how much? If you are a sub on the early parts of the project, must you wait until the end of the project until you collect your retainage? Should you modify your bid to reflect payment of retainage after you finish your work?

SCHEDULE Are there liquidated damages on the project? How much are they? Can the project be constructed in the time allowed by contract? If not, who will be assessed damages and how will they be distributed? Are schedule extensions granted? What for? Do these mitigate the possibility of damages? If the schedule is reasonable, can it be bettered? Is there a bonus clause for early completion? Who shares in it? How much thought must go into making up the bid schedule? Who should prepare it, or is an estimating schedule even needed? Has the schedule been committed to paper so that it can be used for pricing General Conditions? If you are a GC, how much sub input did you get before determining the schedule?

PROJECT STAFFING AND SUPPORT How can you determine what your project staff and the items necessary to support the staff will be? The first necessary component is the schedule e required for your work; if a GC, the entire duration of the project, if a sub, the portion applicable to your trade. Almost all general conditions costs flow from the schedule. Once the duration is known, use a checklist which has been divided into groups of costs such as staff, site temporary facilities, safety, equipment, etc. See the “'General Conditions Estimate Checklist” and the “General Conditions Estimate Detail Sheet” (reproduced from Standard Estimating Practice) attached. You should include every conceivable item of possible cost on this checklist, simply not using those which do not apply to this project. Be consistent here because one small item left out or not considered may be extremely costly. It is a good idea to discuss general condition costs with field supervisory personnel if these latter are somewhat familiar with the project under consideration. Often those who are responsible for the general condition budgets we prepare may have additional considerations -- site access, schedule, etc. The estimator must, however, because of superior knowledge of the project, take ultimate responsibility for the pricing.

ACCOMPLISHING THE WORK

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How is the work to be accomplished? With your own staff? Craft labor.? Subcontractors? How much supervision will the project take? If the job is 90% subbed, the supervision required is substantially different than if the job is 10% subbed. Who provides scaffolding, ladders, site power, drinking water, hoisting, security, etc. Even if the specifications do not address all these areas, they should be worked out between the sub and GC, so as not to cause disagreements later.

OTHER CONSIDERATIONS What is the risk of the project? Risk is usually considered a function of markup, but it affects general conditions also. The greater the risk, the greater the staff and other resources to manage that risk. Does the bid require a contingency? If the drawings are incomplete or there is much room for interpretation as to their meaning, contingency may be in order. What are the warranty provisions? Are they non-standard? If so, how much will it cost to meet them? As a sub, should you take exception to the warranty provisions of your spec and leave the problem to the GC? As a GC, should you accept a bid from a sub who will not accept warranty provisions? How much work will be required of both the subs and the GC to provide the as-builts'? Do they have to be transferred to mylar? Must they be updated during the project? How much time will the process take? Are certified payrolls required? How much time will it take your accountant to prepare them on a weekly basis? Should you put that cost in your bid?

Conclusion These are some of the issues to be considered when preparing your general conditions estimate. To gain confidence in the numbers estimated for the categories of work required, you must track general conditions costs as closely as you track any other costs on the project. Over time you will develop a comprehensive, rational, true cost method of estimating general conditions. Remember, general conditions estimates are always necessary. If they are not done well the cost overruns are just as expensive as those in any other category of the work. Below is a lengthy discussion of general conditions found in Part Two of Section One of Standard Estimating Practice. It is a thorough discussion of the possible parts of a general conditions estimate.

PREPARING THE GENERAL CONDITIONS ESTIMATE

Preface And Introduction The purpose and intent of this introduction is to provide a general definition of the term "general conditions" and a condensed summary of the costs associated with this unique collection of project related expenses.

General Conditions The term" general conditions" is understood to cover any type of construction work or cost that is required to complete the project by either the general contractor or their subcontractors or vendors that are temporarily located at the site, do not normally become a permanent part of the work and therefore usually

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not specifically addressed directly by the specifications, i.e. sections of work - site work through electrical work. The portion of the estimate that addresses these specified portions of the permanent work is the direct cost portion of the estimate. Conversely, that remaining portion of the estimate that addresses those other real items of unspecified or inferred only cost is the general conditions portion of the estimate. The "general conditions" can be estimated by the same principles utilized for the direct cost portion, i.e., the items may be scoped, quantified, and priced. These individual general conditions items are time schedule/ unit rate of work driven. These items are dependent on time constraints of accomplishing each element of work and by nature are priced after the direct cost items have been estimated. The general conditions should never be estimated utilizing a percentage of the direct costs to cover anticipated general conditions. It is recognized that this percentage factor or rationale has merit judgmental value.

General Conditions; Cost The various categories of general conditions and costs may be grouped as follows: 1. Project site indirect costs: general or subcontractors. 2. Home office support and services, general contractor. 3. Services to the owner, architect, and engineer that are specified or eminently required. The intent now is to provide a broad based listing of those functions and costs that are generally encountered for each of the above categories. This listing, however, is not provided in any order of priority or importance.

Project Site Indirect Costs The specific items of general conditions costs that are usually encountered in this category are: Personnel - site and home office - cost committed Temporary plant/facilities Temporary utilities Environmental protection Construction equipment - company owned, leased or rented Mobilization! demobilization Miscellaneous A brief description, along with check list type headings follow elsewhere in this section. Format examples of each specific heading may be found in the appendix. For this portion of the standards, the heading term --temporary plant/facilities' is understood to mean such items that are required to accomplish the work which again, may not be specifically shown on the drawings or specified, i.e. access roads, drainage swales, berms, pits or sumps, excavation shields or tiebacks, temporary protection enclosures, debris chutes, etc.

Home Office Support And Services The items of home office support and services that are required for an individual project or estimate vary widely and are unique to individual firms. The estimator is to address this company's specific requirement individually within the guidelines established by management.

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The subcontractor's home office support and service costs are similarly included in the cost for the work being quoted.

Services To The Owner, Architect, Engineer

These items of general conditions costs are generally specifically specified to be furnished by the general contractor and may include: Owner/architect site office Testing laboratory or facilities Janitorial services Quality control First aid/emergency medical treatment facilities Consulting and testing fees Progress photographs Office supplies/blueprinting As-built drawings, microfilm records

Recap Summary These general conditions procedures are not arranged generally in the order of quantification or in the priority of estimating. They are check list oriented. The other information sources required to generate the general conditions estimate are: The direct cost estimate, containing information on quantities, man-hours by craft, schedule and sequence requirements. The progress schedule, including precedence diagram or cpm format most generally required for submittal with proposal. Contract documents. Company historical costs. Personnel Project Site Staffing Project site costs are a function of project size and duration, subcontractor work scopes, contractual requirements, and craft labor levels. The costs associated with the project site staffing involve the salaries and fringe benefits associated with the staff employees on the project. Costs on large projects may include management and engineering supervision and administrative personnel. Smaller projects may only have a part time superintendent to monitor the work. By employing the schedule developed from the specifications and the direct cost estimate information, the staff size, duration of assignment, and when to mobilize or to demobilize may then be determined. When the direct cost estimate activities and specifications requirements are known, it is feasible to determine when each person is required to be at the project site. Remember, the descriptions shown in the check lists do not necessarily mean that one person has to be employed for each position. Construction bidding is a competitive process. Once the staffing requirements have been determined, verify the planned staffing of the project to the staff to craft ratio on similar projects. Management And Engineering

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Management and engineering may involve such personnel as the project manager, assistant project manager(s), project engineer, assistant project engineer(s), estimators, schedulers, cost engineers, safety engineer, subcontract administrators, and support personnel as required including clerk typists and secretaries. The aforementioned managers, engineers, and estimators may also be at various designated levels such as chief and senior. At contract award, the project manager, estimators, cost engineers, schedulers, and general superintendent may be employed on a daily basis prior to site mobilization. An often overlooked category is quality assurance and quality control. This area may require a qa/qc manager, qa/qc assistant manager, and qa/qc inspectors and technicians. The qa/qc staff also requires support personnel in the form of typists and secretaries. Supervision Supervision may include such personnel as a general superintendent, various discipline superintendents, field engineer(s) and their support personnel in the form of secretaries and typists. Administrative Project administrative personnel may include the office manager, accountant(s), bookkeeper(s), timekeeper(s), secretaries, receptionists, and clerk typists. Temporary plant/facilities Temporary plant and facility costs are a function of project size and duration. These plants and facilities may include contractor's staff and owner offices, change houses for the crafts, tool rooms, warehousing, material storage yards, fuel and maintenance areas, and provisions for emergency medical treatment. When there are requirements for considerable amounts of field fabrication, the establishment of field fabrication shops may also be necessary. In addition to the physical plant, there may also be requirements for barricades, fencing, signs and markers, and maintenance of traffic areas. Special shoring, trench shields and bracing, scaffolding, ladders, and temporary shelters for material storage or special warehousing should also be considered. Staff and owner offices are determined by the their number and position. Individual offices may be required for the project manager(s) and owner's representative(s). Offices for the support staff probably would be satisfactory with an open or landscape design. Craft change houses or rooms will be determined by the number of crafts and their size, climactic conditions, and prevailing practices in the locale. Tool and material control distribution is a prime factor in the determination of the proper type of storage area for them. It is not only good business practice, but also mandatory, to provide for adequate emergency medical treatment areas at the project site. The size and type of these areas are obviously dependent on the number of employees. In certain instances, a first aid kit in an office will suffice while in others there may be a requirement for separate offices, ambulances, and trained emergency medical technicians. Depending on site conditions and operations, barricades, fencing, and signs may be required. Specifications may require the maintenance of traffic patterns, especially in highway construction where there is considerable responsibility for protection of the general public.

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The storage of major equipment items may require substantial amounts of blocking, bracing, shoring, and the preparation and maintenance of storage areas. Temporary Utilities Temporary utilities are the requirements that may include, but are not limited to, construction water, fire protection, potable water, dust control, electrical construction power and lighting, sanitary systems, and heating or cooling systems. The advantages and disadvantages of independent gas, air, and welding power systems for use in construction operations should also be considered. The construction water source may range from a simple hydrant tap to a complex distribution system.Fire protection water may involve storage tanks, the distribution of water in barrels, or having it available at the site through other means. Fire protection of electrical devices and electronic equipment will require systems other than water and will depend on the scope and nature of the area involved. Fire protection curtains, blankets, and fire watch personnel may also be required. There should be consideration given to adequate lightning protection. Project Office Expense Project office expenses are those costs associated with the expense of maintaining and operating a project office. These are determined by the scope and duration of the project. Included are the costs for supplies such as stationery, general office supplies, and engineering/drafting material. Office equipment may include desks, tables, chairs, filing cabinets, copy machines, blueprint machines, calculators, computers, and electronic data telecommunications systems. Utility hookups and monthly costs for water, power, gas, and telephone are included in this section, along with applicable permits and licenses. Environmental Protection Information regarding this increasingly important area is being developed and will be published as a supplement to this section at a later date. Construction Equipment Construction equipment necessary to adequately perform the scope of work is included in this section of the general conditions estimate. Each area of the direct cost estimate that requires equipment for it's assembly or installation should be identified in order to properly balance the equipment required for the project. The costs for equipment usage may include rental, operating expenses (fuels, lubricants, repairs), operating labor, and depreciation. Equipment costs for such items as dust control and warehousing should be included in this section. Investigate the advisability of the use of company owned equipment as opposed to leased or rented equipment. Types of equipment to be used on a specific project may include, but are not limited to, automotive, trucking, cranes and rigging, excavation, pumps and compressors, welding, drilling and blasting, boring and tunneling, instrumentation, and testing. Automotive equipment includes sedans and pickup trucks. Trucking includes tractor units, trailers, water trucks, fuel and maintenance trucks, farm type tractors, and mining and heavy hauling off road trucks. Cranes and rigging equipment may include crawler, self-propelled and truck mounted cranes, hoists, man lifts, derricks, pile driving, and other lifting equipment. Excavation equipment may include scrapers, elevating scrapers, backhoes, trenchers, loaders, compactors, boring machines, and loaders. Pumps and compressors may include test pumps, dewatering pumps, and air compressors.

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Regardless of the category being used, each one requires an ownership cost, whether external or internal rental plus operating costs. Geographical areas, climactic conditions, and availability have a substantial impact on equipment selection and usage. The estimator should thoroughly investigate these items prior to selecting particular equipment, especially if the project site is located in an area that is not familiar to the estimator or the company. Three basic situations apply to determine the location of the equipment for estimating the mobilization costs. These are: 1. The company currently has it's own equipment, 2. The company will purchase the equipment required and/or 3. The company will rent the equipment required. In all probability, it will be a combination of these three cases that are estimated. With the currently owned piece of equipment, it needs to be located and distance identified for transport to the project site. Also, determine if permits are required for over width, over height or over weight. Determine if there are requirements for activities by your own forces, by a transport company or by a combination of both. Up to five general operations may required for the relocation of equipment. These are the disassembly, loading, transporting, unloading, and reassembly. Disassembly will be required on larger equipment such as cranes and large excavating equipment. While virtually all types of equipment require some type of loading, keep in mind that this is generally not a great time consuming operation. Transport of the equipment should be well defined so that an accurate quotation may be obtained from a transportation company or that it may be estimated by hauling equipment required, crew size, and miles to be transported. Offloading is the opposite of the loading operation that was performed. Time required for the offloading will be nearly the same as for loading. Reassembly is also the opposite of the disassembly operation but will invariably require more time than did the disassembly operation. The relocation costs for the second case, which involves the acquisition of a piece of equipment, may require the same effort as if it were already owned by the company. This is particularly true when purchasing used equipment. If it is at all possible, purchase arrangements should be made and reviewed to determine if it is feasible to have the equipment delivered fob to the project site. Rented equipment should not only have a quotation for the appropriate hourly rate, but should also be quoted with delivery charges to the project site (this delivery charge should also be reviewed). Mobilization Mobilization is a function of the job size, type of work, distance and time. It is defined as the cost incurred when starting up a project. Items to consider for mobilization include construction equipment, small tools and consumables, construction plant, and personnel. Personnel Mobilization Relocation of personnel for a construction project is likely to occur for the longer duration projects involving a considerable distance from other company operations. This relocation may include the rental of an apartment and furniture for the employee, their entire household relocation or a combination of both. The duration required for this relocation may be determined from the project start and completion dates, along with major schedule milestones. When preparing the estimated cost for the relocation, examine the situation to determine if there is any economical advantage to either method.

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Plant/Facility Mobilization Project office trailers and similar relocations may often times be contracted out to a firm specializing in the moving of these type units. The scope of this subcontract may include the transportation and setup of the unit, usually on blocks or timbers. The contract will not include utility connections (electric, gas, sewer, and telephone). The provision for these connections is covered in a separate section. Construction Equipment Mobilization Construction equipment consists of the major equipment required for the performance of the work. Once the equipment has been determined for the project, cost factors for mobilizing the equipment include location of the current equipment, it's size and weight. Small Tools And Consumables Mobilization Small tools and consumables usually present little problem when they are being transported. Current inventory tools should be shipped to the project site in portable vans and bins for initial or permanent setup at the project site. Having these portable units approved for either highway use or adapted to fit on a flat bed truck or trailer, transportation charges and minor associated labor may be readily determined. If the project requires purchasing of new tools and consumables, delivery to the project site may be arranged with the supplier to minimize the labor costs associated with delivery and handling. Demobilization Those items brought to the project under mobilization need to be relocated off the project. Generally, the next project should assume the cost of relocating the equipment in it's mobilization costs. Should there not be an identifiable project to relocate the equipment to, then the costs need to be included in the estimate. Funds for final project cleanup, removal of surplus materials, punch list, and final inspection should be included in the estimate. Temporary enclosures should be investigated to determine if there may be a credit for scrap or salvage material. Miscellaneous Insurance, Taxes, Bonds, And Permits The anticipated costs for insurance, taxes (other than direct labor burden), and bonds are included in this section. As defined in part one, section three, scope of the estimate, of this manual, the intent of the term direct labor burden is to imply the combined costs for required worker's compensation insurance, employer paid social security taxes, state and federal unemployment compensation insurance, union and/or company fringe benefits, and subsistence. Direct labor burden shall be shown as separate direct field costs in each estimate. Refer to that section of the manual for the balance of the definition. Some of the insurance considerations include general liability, business vehicle, builder's risk, umbrella excess liability, equipment floaters, and other special policies as may be required. Taxes may include state and local sales and/or use, motor fuels for local, state, and federal, property, equipment, and vehicle registration and licensing. Certain states require the payment of sales taxes on the total contract amount. Verification of the tax structure that will govern at the site of the project should be made prior to completion of the estimate. Various bonds may be required by the specifications. These include bid, payment, performance, material supply, and installation bonds and include both the general contractor and subcontractors. Payment and performance bonding is good business practice, whether required or not.

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Each project may be subject to the domain of various levels of governmental entities that may require the purchase of permits. Generally, the county and city entities adopt or modify the permit and plan check fee schedule of the uniform building code. Verify the governing agency and it's policy concerning permits and required inspections. Permits may also include, but are not limited to demolition, shoring, and access. Testing/Inspection And Outside--Services This section may include such items as testing and inspection services. Material and soil testing, along with personnel testing and clearance and authorized inspectors are some of the items that may be encountered in this section. Testing and inspections to be performed by the company's own forces should be included in the direct cost estimate. These costs may include craft labor, testing equipment and materials, and supervision for performing the tests. It is good practice to designate a separate section within the direct cost estimate for this work. Tests and inspections required for a project are detailed within the specifications. These tests may include destructive and non-destructive examinations of materials from suppliers, testing of installed materials by xray or other means, soil testing, concrete testing, and etc., and may require the involvement of an authorized inspector. When obtaining material price quotations, certain test requirements may be included in the price of the materials. Other more specialized tests may not be included in the price. Identification of the testing requirements to the supplier is essential in order to obtain proper prices. When testing of installed materials by x-ray or other similar procedures is specified, specialized, licensed firms must be used. These firms will usually provide unit price or hourly quotations for their services. By identifying the scope of testing, the costs for these services may be determined with a relatively high degree of reliability. Soil and concrete testing may be the responsibility of either the contractor or the owner. Consult the specifications to determine where the responsibility rests. When they are to be performed, it is most often completed by another specialized testing firm and quotations are usually based on a unit price or hourly basis. An authorized inspector is generally considered to be an independent individual or firm that is qualified or licensed to perform the designated work and used to inspect the work on the owner's behalf.These costs may be quoted on a lump sum or hourly basis. Other Services This section includes janitorial and security services. The use of these outside services on a contract basis should be compared with the anticipated costs for doing the work with the company's own forces in order to determine the most cost effective and efficient method. Security services may be used to control access to the site and for routine patrols of the premises during nonworking and/or working hours. These services may be quoted on an hourly, weekly, or monthly basis with adequate definition of the scope. Small Tools And Consumables Small tools and consumables necessary for the installation of the work are generally regarded as having a useful life only for the project duration. Two common methods for inclusion of this section in the estimate are either on a dollar or percentage basis. While the percentage method is commonly used, recommended practice is that if an item can be quantified, then quantify and price it. Small tools are usually a function of the labor and type of project.

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Determining the amount of small tools and consumables required for the project as a function of labor hours is more reliable than determining it on the basis of labor costs or total project cost. Reference to historical records for judgmental verification is recommended. Weather Protection This section is for the provision of protection against the elements. Extreme heat, cold, moisture, etc. are an occurrence on most projects. Adequate weather protection may range from simplistic procedures to elaborate and expensive systems. Typically, materials and the labor required to install and remove them are unit heaters, fans, tarps, curing blankets, evaporative coolers, ice, plastic enclosures, and temporary shelters. Home Office Support This section may range from two extremes - service and cost. One instance involves minimal home office support where the project has it's own support staff. The other instance is where there is no project staff and the project is supported entirely from the home office. Whatever the case, support areas to consider are management, technical, and administrative. Funding for this section may be estimated in either of two ways. For a project that is to receive minimal home office support, the funding may be defined as project overhead with no estimate dollars in this section. Where the project is to be supported from the home office, estimate amounts should be included in this section in accordance with the method by which the project will be supported. Advantages for having part time office support for a project include the elimination of relocation costs and the availability of the same personnel for other proposal or projects on a similar basis. Disadvantages include the requirement for periodic site visits with the resulting added costs of transportation, lodging, and meals. Prior to any decision as to the method of home office support, a careful evaluation of the advantages and disadvantages of each method should be completed. This evaluation should consider the requirements of the project and the overall company scope of work. Management Support In the first instance above mentioned where there is minimal home office support, management support is usually responsible for the monitoring of the field operations. This is usually not a full time duty. It would likely consist of someone reviewing the periodic project cost reports, maintaining a liaison with the owner and assisting project management for unusual problems on the project. In the second instance above mentioned, the management section is dependent upon the scope of the project. This case is likely to arise on a small project in the same vicinity as the company headquarters. It may involve an estimator/project manager on a part time basis with several other projects. Technical Support Technical support is a function of the contractual requirements and the complexity of the project. If the site has a full time staff devoted to constructing the project, this may consist of technical personnel performing the shop drawings submittals, scheduling and other similar information when this project is in its early phase. As time progresses, these support activities should diminish. Administrative Support

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Administrative support for the home office is to assist the field operations staff. When there is a full time project staff, this may be an infrequent effort to assist in developing the payroll, maintaining files for the project and other similar duties. Escalation Escalation is the amount that prices for labor, materials, and equipment are expected to increase during the life of the project. When estimating and bidding work, escalation will probably occur at some point in time for labor and materials. When the project schedule is completed wage rate changes may be determined on the affected hours. With materials purchased at the start of the project, material escalation would be a minor item unless there are items having long lead times and are priced at the time of delivery. In addition to the potential for escalation on permanent materials, wages and fringes, temporary materials, freight charges, payroll taxes, and insurance may escalate at a more rapid rate than other items. Finance expenses The term "progress payment delay cycle" will cause each project to incur finance expenses to build whether the funds are borrowed or taken from company reserves. The progress payment delay cycle should be charted to determine the cash requirements due to expenditures exceeding the income. There will always be an outflow of cash at the beginning of a project. This is a fact of life and cannot be avoided. By knowing the amount used from borrowed or reserve funds, calculations may determine the finance expense. To calculate this cycle, the specifications will ordinarily define when applications for payment are to be submitted, what is allowable in the request, how long the owner has to review and approve the request, and the amount of retainage to be applied to the progress payment request. Generally, the contractor will work for nearly thirty days before a progress payment request may be submitted. During this time, expenses have been incurred in mobilizing the project, staff salaries, craft wages, equipment rentals, operating costs, utility hookups, and material costs. The submittal preparation may take as much as five days to prepare from the cutoff date, and the owner may take as much as two to three weeks to review and confirm that the request is in order. After this review, it may take up to thirty days to process the payment to the contractor, and usually there is a retainage of ten percent withheld. Serious consideration should be given to determine the amount of funds required from the project commencement until the first payment is received. Since retainages are sometimes withheld until project completion, they should be considered separately and include the length of time withheld. Contingencies To many, the use of contingencies is an acceptable inclusion in the estimate. Contingency has been defined as the amount required to adjust the estimate to the project's proper valuation. Others use the contingency as a risk item for unknowns. For estimates other than competitive bids, this is acceptable and illustrates the use of contingencies. Contractors in a competitive bidding situation are not afforded the luxury of including contingencies or risk factors in their proposals for unknowns. With the use of historical labor and equipment costs (which have

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normal mistakes, etc. built in), the application of accurate material quotations, and bids from reliable and responsible subcontractors, the need for contingencies in most areas will be eliminated. Proper evaluation of the contract documents, obtaining document clarifications, or by taking exception to the items in question will further reduce the necessity of contingencies. Should there be major items of concern remaining at bid time, price them out or withdrawal from the bidding procedures may be advisable. In essence, costs included would be for those items which have been identified as risk producing areas, defined as to scope and priced accordingly. Summary By proper definition of the major areas that contribute to project general conditions costs, the details within each section may be identified and priced accordingly. The most common error is the misidentification of the scope of the general conditions, whether under or over priced. Conduct a thorough evaluation of each general conditions item to insure that it is or is not required. This is accomplished by awareness of the required scope of work, requirements of the specifications, and the estimator's own operations as a company.

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