DEFINITION

General Requirements & Preliminaries refer to the non-permanent and temporary provisions necessary to support the execution of a construction project.

These items are essential for mobilizing, managing, and safely completing the work, but they do not form part of the actual physical structure.

Unlike the priced items from Division 2 to 16 like concrete, steel, wires, pipes, elevators or windows, the General Requirements & Preliminaries are temporary in nature.

In colloquial terms, these are items that are needed to complete the project but are not turned over to the owner at project completion.

They are typically included in the Bill of Quantities (BOQ) as a separate section with itemized components and are crucial in both contractor pricing and project controls.

Division 1 captures the cost for the strategy and execution plans of the project. It defines the overall conditions, methodology, measurement methods, quality, safety and administrative protocols that govern the work.

When trying to estimate the General Requirements & Preliminaries, the estimator should collaborate with the scheduler, resource planner, design manager and project manager to understand the over-all goal of the project. This understanding is crucial in capturing the necessary resources that should be included in the Bill of Quantities for this division.

Listed below are the major sub works of Division and should form part of the checklist in completing the estimates:
a. Site Management and Supervision
b. Temporary Facilities
c. Temporary Utilities
d. Site Equipment and tools
e. Safety, Health and Environmental Requirements
f. Quality Assurance and testing
g. Project documentation and communication
h. Security and site maintenance
i. Insurance, bonds and permits
j. other costs and contingencies

As a way of checking, you can allocate this cost on a recurring monthly basis especially for projects with long duration.
Frequently Asked Questions:

1. What percentage of the total project cost should be allocated for General Requirements?

A rule of thumb at early conceptual stage would use 8 to 15% of the construction cost as a provision for these requirements. However, make sure you validate your assumptions when details are made more available.
More complicated projects and riskier projects will have higher cost implications.

2. Should General Requirements be included as a lump sum or itemized in the BOQ?

An itemized detail in the BOQ would ensure transparency and clarity for both the owner and the contractor.
In the event of contract extension, it will be easier to negotiate the adjustments on the General requirements if is detailed.

A lump sum amount can lead to confusion, disputes and misunderstandings on both parties.

3. What is typically included in “mobilization and demobilization” costs?

Typically, mobilization should include cost for transportation of equipment, supplies and staff, site access preparation, and setup of temporary offices, utilities and facilities.

Demobilization should include removal of temporary structures, equipment returns, site clearing and handover.

4. How do I price project management and supervision costs?

This largely depends on the strategy and approach of how the project will be manned. Make sure you have the adequate number of people who will be able to execute the project.

When pricing, always include the cost of indirect costs like government mandated benefits, allowances, insurance and other fringe benefits given to the personnel assigned on site.

Most common mistake is just to price these using salaries and not including the add-on costs.

5. What’s the difference between General Requirements and Overhead costs?

Think of general requirements as site and project specific. Overhead cost is the corporate and indirect cost of the company such as but not limited to human resource, marketing, accounting and office rent.

6. How do I price the insurance and bonds of the project?

Make sure that you have checked the insurance and bonding requirements of the contract.

It is very handy that you are familiar with the cost of insurance premiums from various insurance companies. It is a common industry practice that some project owners prefer certain insurance companies.

These are your typical Insurance requirements:
1. Contractor’s All-Risk Insurance (CARI)
2. Third-party liability insurance
3. Workmen’s Compensation Insurance
4. Professional Indemnity Insurance
5. Equipment and Plant Insurance

Typical Bonding Requirements:
1. Performance Bond
2. Bid bond
3. Payment Surety Bond
4. Advance Payment Surety Bond

7. What is the difference between a bond and insurance?

A bond is a guarantee issued by a surety company to ensure a contractor fulfills specific contractual obligations.

Insurance is a risk transfer tool that provides financial compensation for covered losses, damages, or liabilities.