Understanding the Basics of Preliminaries in Construction Projects

In the complex world of construction projects, every nail and brick is significant in the final product. However, materials, labor, and equipment are not the only elements that bring a construction project to life. There is a wide range of activities and processes that are not directly involved with the building phase but are equally important to the end result. We are talking about preliminaries.

Preliminaries or, as they are referred to in some territories, general conditions are all the services, activities, processes, and costs that assist in project completion but are not directly related to construction. These crucial elements, often overshadowed by more direct costs, can significantly impact on the project’s overall budget, making managing them correctly a fundamental part of success.

Understanding preliminaries is the first step to getting them right. Neglecting these crucial costs can lead to budget overruns, affecting the project's profitability. To help you avoid this, we’ve put together this insightful guide covering everything preliminaries!

What are Preliminaries in Construction?

Construction preliminaries, or “prelims,” are costs that are crucial to the completion of the project but are not related to a specific work section. Prelims can be fixed, one-off, or ongoing costs and are fundamental for accurately estimating the entire cost of a project.

The Chartered Institute of Building’s (CIOB) “New Code Of Estimating Practice” defines preliminaries as “…The cost of administering a project and providing general plant, site staff, facilities, and site-based services and other items not included in the rates.”

Prelims are listed as a separate section in the bill of quantities, and while not directly related to the physical building work itself, they are equally important to completing the project. Examples of preliminaries in construction include project management costs, scaffolding, on-site utilities, and insurance, among many others.

As mentioned earlier, preliminary costs can be fixed, ongoing, or one-off. For instance, a site inspection can be a one-off payment, while on-site utilities might be a monthly payment. These details must be clearly outlined when calculating preliminaries costs to prevent surprises from affecting the budget. 

To make the process easier, preliminaries in construction contracts can be divided into three sections:

• One involves costs related to the site’s establishment, including access permits, land take, accommodation of welfare facilities, temporary access roads, etc.
• The second involves running costs like power, heat, and office rent.
• The third concerns handover costs, such as health and safety files, demobilizing offices, etc.

Who calculates construction preliminaries?

The general contractor (GC) is the primary person responsible for calculating prelims, as they possess the knowledge to determine the quantities and scope required to complete the project. For this purpose, the GC often hires a quantity surveyor or cost estimator, who uses their expertise to calculate the costs of preliminaries and advise on cost-effective solutions that benefit the budget.

The project owner might ask their team to provide initial input about preliminaries to include in the tender documentation and ensure all bidders understand the project’s logistical and operational requirements. However, for the above reasons, the GC has the final say on the actual costs.

How are Construction Preliminaries Calculated?

The way preliminaries are calculated depends on the project's nature. In bigger, more complex projects, prelims are divided into smaller items and priced based on a monetary amount. In smaller projects, prelims can be charged as a percentage of the total contract value. However, this might not be the best choice in all cases, as some projects have more preliminary costs than others, and the percentage might not be enough to cover all of them. For example, a public infrastructure project can have a lot of preliminary costs for regulatory compliance.

Preliminaries vs Preambles

Preliminaries and preambles are both fundamental documentation for efficient contract management. Because the names sound similar, they can be confused. However, they differ in scope and focus.

As mentioned, construction preliminaries are focused on the logistical and managerial aspects of a project. Their primary purpose is to ensure that all activities that contribute to the construction project, but aren’t part of the final structure, are accounted for. Preambles, on the other hand, are introductory paragraphs placed on the first page of the BoQ that help to understand the interpretation and application of the technical specifications. Their main purpose is to provide clarity and consistency to ensure the work is carried out as expected.

The Importance of Preliminaries in Construction

Construction prelims bring clarity to a project while ensuring all costs are accounted for. This mitigates the risks of legal disputes and provides a positive relationship between the owner and the contractor. For that reason, proper management of prelims is fundamental, as it contributes to the project’s overall success. Let’s explore some benefits in more detail below!

• Transparent tendering and bidding: Preliminaries play a crucial role in a construction project's tendering and bidding process. They help contractors bid on the project considering the entire scope, not just the actual building elements, making their quote for the work more accurate and complete. Prelims also help the owner standardize the bidding process by ensuring all bidders price their work based on similar criteria.
• Clearer project scope: Contractor preliminaries outline the general requirements for a smooth project execution, including details about the site setup, temporary works, and health and safety processes, among other logistical and administrative considerations. This ensures that all the parties involved clearly understand the scope and their responsibilities, mitigating the risk of misunderstanding or disputes between the owner and the contractor.
• Enhanced project planning and coordination: In addition to providing insights about costs, prelims also include detailed information on site setup, including the placement of site offices, storage areas, and access routes. This allows for efficient planning and scheduling, prevents delays that can cost money and time, and increases construction productivity.
• Efficient cost management: Prelims provide detailed information about indirect costs for aspects of the project, related to, but not forming part of the final structure, therefore still fundamental to the project's successful completion. This ensures that cost estimates and the project’s budget are more accurate by reflecting expenses from the entire project up to the smallest detail. Doing so also allows for better cost control in construction projects, as no unforeseen expenses will come up that can lead to a budget overrun.
• Better risk management: Prelims provide detailed insights into logistical and administrative activities and processes, allowing for efficient construction risk management strategies. Potential threats, issues, or risks can be identified and mitigated before the building work begins. Prelims can also include contingency plans on how to deal with unexpected situations like weather conditions or delays in the delivery of materials or equipment, helping to mitigate their disruption.
• Increased regulatory compliance: Prelims also include information about health and safety measures, safety training, site signage, insurance permits, environmental protections, and much more. Having that level of insight in a single document allows these measures to be implemented and ensures regulatory compliance across the project, making them fundamental for success.

Construction Preliminaries Breakdown: Key Components

There are different types of preliminaries in construction, each covering different expenses related to the project. As mentioned earlier, prelims might vary depending on the size and nature of the project. Different construction project types have diverse requirements that might make prelims more expensive than others. Still, some common items are standard; these include:

Site setup

This section of the preliminaries covers all activities, and the costs related to setting up the site for construction. This involves processes to improve site efficiency, like access roads, environmental compliance, and strategies to mitigate the risks of impacting adjacent structures, among others discussed below:

• Installing temporary barriers around the construction site to prevent unauthorized access and avoid security or safety issues.
• Installing temporary site offices, toilets, and rest areas for workers to ensure a functional and safe work environment on site.
• Erecting signs that indicate site rules, instructions, and directions to ensure workers and external visitors have clear guidelines for safety.

Project management and administration

This section of the prelims includes the costs related to project management and administration, including payments to management workers, reporting, quality assurance, documentation, and more.

• Allocating resources to pay project managers, site managers, supervisors, and other project stakeholders.
• Setting a professional construction reporting system to monitor progress and identify potential issues or improvements.
• Setting up systems to boost communication and collaboration between project stakeholders, such as investing in construction collaboration software.
• Coming up with a construction quality assurance strategy involving the payments for quality inspectors, testing, and other activities.

Health, safety, and environmental compliance

As its name suggests, this section covers all costs related to ensuring safety, health, and environmental regulations compliance. As discussed in a previous post, construction site accidents are not uncommon, and allocating resources to ensure safety across the board is paramount to avoid such accidents. Common costs related to this topic are:

• Acquiring personal protective equipment (PPE), such as hard hats, high-visibility vests, safety goggles, and gloves, among many others. Providing PPE to workers not only ensures their safety but also ensures the project's compliance.
• Installing first aid facilities on-site with trained personnel who can assist workers in case of a safety emergency makes workers feel protected, boosts their productivity, and contributes to a safer work environment.
• Setting up systems for collecting and correctly disposing of waste to ensure materials are properly recycled.
• Ensuring that procedures, and the necessary equipment, are in place to ensure that pollution of water courses, damage to trees or their roots, etc. is not caused during construction.
• Installing dust suppression systems and noise barriers will minimize the impact of construction work on the surrounding communities and ensure compliance with regulations.

Insurance and bonds

Similarly to the previous point, prelims also cover costs related to other legal requirements that protect the owner and the contractor and ensure the project is compliant. These include:

• Allocating resources for different types of insurance to protect all parties against financial risks coming from accidents or injury. This also covers workers' compensation insurance in case of injury.
• Obtaining various permits for construction activities ensures all legal and regulatory requirements are met and prevents costly legal issues later.

Temporary works

Temporary works are non-permanent structures or services necessary to support the building phase but are not a part of the final construction, which means they are removed once the project is finalized. Some common preliminary costs related to temporary works include:

• Erecting scaffoldings for workers to safely work at heights. Scaffoldings are necessary for bricklaying, painting, and installing windows or roofs, among other things.
• Constructing temporary roads and access paths to allow vehicles delivering materials or equipment, or transporting waste, to move through the site.
• Setting up temporary utilities like electric connections to power equipment, water supplies to mix concrete or cleaning, and drainage systems to prevent flooding that can affect the project schedule.
• Building temporary pedestrian bridges or walkways over excavations or uneven ground to allow workers to pass over safely.
• Erecting, using and dismantling tower cranes or other hoisting systems that enable materials to be transported to the upper floor of high-rise buildings.  

Factors to Consider When Pricing Preliminaries in Construction

The content and price of preliminaries will vary depending on the project type. However, there are some key factors to consider that can make pricing prelims a bit easier and more accurate.

Nature of the project: The project's nature is fundamental to pricing preliminary work. Bigger projects will naturally incur more set-up costs than smaller projects. Likewise, commercial projects are more likely to require more regulatory and insurance-related expenses than residential projects. Therefore, it is a good strategy to look at preliminary pricing from an individual project perspective.

Site conditions: The site conditions are also key factors when pricing prelims. Some sites might have more restricted access that requires additional logistics resources. Sites in remote locations might incur additional expenses for electricity or water whilst sites in city centers may incur costs arising from the limited space to store materials and restrictions on the times that they can be delivered to site.

Local regulations: Local building codes, zoning regulations, and other local-specific legal requirements can make a specific project more difficult or expensive. This is an excellent example of why prelims are priced based on the project and not a fixed fee.

Economic factors: The current economic conditions of the area where the project will be carried out can also influence the price of preliminaries. For example, inflation makes the costs of resources more expensive.

Final Thoughts

As you learned throughout this post, construction preliminaries are vital to estimating project costs correctly and accurately. They also ensure the project is bid fairly and that all stakeholders work based on the same goals and information. Properly accounting for preliminaries can help create a more accurate budget, ensuring the project is completed successfully.

To ensure success in the process and avoid leaving critical information out of your preliminaries, the best approach is to support yourself with professional construction solutions. Our cost estimation software, RIB CostX, provides a digital environment to manage costs effectively and ensure projects remain profitable across the board. CostX’s estimating templates will help you accurately price prelims to save time and ensure maximum accuracy.

If you are ready to experience the power of a professional solution developed by experts with decades of experience, get a demo for RIB CostX today!