Preliminaries in Construction Contracts
Preliminaries are dealt with in most construction contracts by construction firms, project managers, and general contractors. These preliminary expenditures, often known as prelims, cover the full construction project rather than specific work parts or activities.
Construction contracts contain a section called ‘preliminaries’ that lists items that the contractor needs to complete the work but will not actually become part of it, such as scaffolding, plants, water, and power costs to the site. The preliminary part frequently summarizes the contractual conditions and services that the contractor will perform.
They are computed as a lump sum for each project and added to the first cost after the tender is finalised. Preliminary expenses are incurred on all projects, especially those with low tender values. Ordering materials, managing workers, and attending site meetings all contribute to the overall cost of the project.
Construction preliminary expenses have an impact on your complete project, and they involve a wide variety of equipment, labour, and supplies. Prelims might be one-time expenditures or continuous costs that begin at the start of the project and continue until it is completed.
Preliminaries in construction are best defined as a series of items required for a construction business or contractor to accomplish a project but that will not be included in the finished work—site overhead, scaffolding, powering the site, and so on.
Preliminaries are Divided into Three Categories:
- Initial Cost- It is a routinely fixed cost which is paid at the commencement of the project.
- Running/Recurring Costs- It is the cost that is added all together and spread evenly over the duration of the project work.
- Final Costs- It is a routinely fixed cost is paid at the completion of the project.
In General, Preliminary Items Consist of the Following Headings:
- Preliminaries Particulars (Including project and contract details, works, goods & materials by others, contractual obligations and liabilities etc.)
- Plant, tools and vehicles.
- Site Administration and Safety
- Protection of the work
- Water, lighting and power
- Access to the site, temporary roads, hard standings, and crossings.
- Temporary accommodations
- Traffic regulations
- Safety, health and welfare
- Maintenance of public and private roads
- Garbage and dirt removal
- Control of noise and other pollution
- Statutory compliance and obligations
- Surety and performance bonds
- Shop drawings, coordination and record drawings
- Progress photographs and reports
- Schedules, charts
- Cleaning, clearing and handover
Examples of Construction Preliminaries
A construction preliminary list is frequently lengthy and covers expenses for products in all aspects of a project. There are, however, some components that are nearly always included.
1. Costs of Management and Administration
These expenditures include payments to project managers, site managers, and stakeholders. Rather than just working on specific parts of the project, they are responsible for the entire project. The inclusion of these charges in the preliminary costs promotes transparency for the owner and helps the contractor account for the costs appropriately.
2. Costs of Planning and Design
All construction projects necessitate the contractor planning the work as well as creating and maintaining programme. Adding this activity to one work section is not possible. The contractor has additionally increased charges for the owners’ requirement for regular reporting on programme progress. As more contracts turn into collaboration, more contractors are taking on design work to apply their knowledge of procedures and materials. It is common for this design work to cross work parts.
3. Site-Specific Services
From access roads to erosion control, construction projects include all aspects that improve the site and allow for more efficient and orderly construction. Environmental standards for projects must also be met in order to comply with local and national regulations. Construction may have an influence on nearby structures and neighbours, and the contractor must account for the costs of mitigating damage or irritation. As a result, preliminary construction costs cover these costs as well.
4. Costs of Mockups, Testing, and Sampling
Mockups of how finished components of the project will look once completed, are frequently requested by designers and owners. Mockups might be full-size, tiny, or virtual. Many items used in building must be tested before they can be used. Concrete slump testing and randomly sampling lumber moisture content are two examples.
Three Sections Can be Found in a Typical Preliminary Pricing Document:
The costs associated with site establishment, such as access permissions, property acquisition, site accommodations such as welfare facilities, and so on.
Operating expenses, such as heating, lighting, and power.
Costs associated with handing over or terminating the contract, such as demobilising site offices, health and safety files, and so on.
There are also preliminary costs that you cannot simply assign to a work segment but can nonetheless include in the preliminary costs. For example:
- Provisional amounts
- A general risk allowance
- Site safety
- The price of design services
- Utility supplies
Preliminary Construction Percentages
Preliminary costs can apply to any size project. In some circumstances, especially for minor tasks, include prelims as a proportion of the overall project cost is preferable to price each item separately. These percentages vary greatly depending on geography, project scale, and so on, ranging from roughly 5% to more than 15%.
To deliver a finished project while maintaining your ideal profit margin, you must perform preliminary work in construction contracts. Overlooking prelims in your contract can lead to disputes and overrun your contingency funds. Contractors, project managers, and construction companies should account for all prelims in their contracts.
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What all is usually included in preliminary items?
- Vehicles, tools, and plant.
- Administration and safety on site
- Lighting, water, and electricity
- Short-term accommodations
- Regulations governing traffic
- Well-being, safety, and health etc.
What all categories are there in preliminaries?
Preliminaries are divided into three categories:
- Initial Cost
- Running or Recurring Costs
- Final Costs
Where all are the preliminary costs applied to?
A preliminary expense can be incurred on any project, especially those with a low tender value.