Understanding Preliminaries in a Construction Estimate

Preliminaries — sometimes called "general conditions" or "site costs" — are the costs of establishing and running a construction site that aren't directly attributable to a specific trade or work package. They're the scaffolding, the site sheds, the project manager's time, the safety compliance costs, the temporary power and water.

In a typical construction estimate, preliminaries make up 8–15% of the total project cost. On complex projects, they can be higher. On simple refurbishments, lower.

Understanding how preliminaries are structured and priced matters whether you're a client assessing a tender, a head contractor building a budget, or a PM reviewing a cost plan.

What preliminaries typically include

Site establishment and removal: site fencing, hoarding, site sheds, toilet facilities, first aid, temporary power and water connections. These are largely fixed costs — they happen once at the start and once at the end of the project.

Site management: the head contractor's site supervisor, project manager, and contract administrator. These are time-related costs — they scale with the project duration.

Site running costs: security, cleaning, waste disposal, temporary signage, traffic management. Also largely time-related.

Compliance and administration: construction induction, OH&S compliance, site inspection costs, as-built documentation.

Small plant and equipment: items not attributable to a specific trade — a telehandler for unloading deliveries, a site generator, minor tools.

Fixed vs. time-related costs

This is the most important distinction in preliminaries analysis.

Fixed costs are incurred regardless of project duration — site establishment, connection fees, some compliance costs. They appear in the estimate once and don't change with programme changes.

Time-related costs scale with the project duration — site management salaries, site running costs, plant hire. If the project runs six months, the site supervisor costs six months of salary. If it runs nine, it's nine months.

When a project is delayed or extended, the time-related portion of preliminaries continues to accumulate. Understanding this split — how much of the preliminaries are fixed and how much are time-related — is essential for assessing the cost impact of a programme extension.

Common issues in preliminaries pricing

Underpriced preliminaries: A tender that wins on a low preliminaries allowance may be buying work at a price that can't be delivered. If the site management allocation doesn't cover the actual management time required, that cost gets recovered through variations.

Overpriced preliminaries: A heavily front-loaded preliminaries section can mask a low trade package price. The contractor gets paid for preliminaries early in the programme, when actual site management costs are low, and uses that cash flow to fund later trade packages.

Missing items: Ask specifically whether the following are included in the preliminaries section: OH&S compliance costs, traffic management, authority fees (if the contract makes these the contractor's responsibility), and as-built documentation. These are frequently absent from preliminary estimates or hidden in trade packages.

Using preliminaries in variation pricing

When a variation extends the project duration, the time-related preliminaries are recoverable as part of the variation cost. The head contractor should be able to demonstrate the daily rate for time-related preliminaries from their priced schedule — and that rate should be applied to the additional time caused by the variation.

A head contractor who hasn't clearly separated fixed and time-related costs in their preliminaries schedule will have difficulty substantiating this claim. A principal who hasn't asked for the breakdown at tender will have difficulty assessing it.

Preliminary review and cost plan preparation is available as part of our estimating service. Contact us to discuss your project.