What are preliminaries in construction contracts?

Most construction companies, project managers, and contractors will deal with preliminaries in their construction contracts. These preliminaries, also called prelims, cover costs for an entire construction project—not for specific work sections or activities.

We’ll define preliminaries in construction, discuss what prelims are, and gain an understanding of what preliminary costs are included in a construction contract.

What do preliminaries in construction mean?

Preliminary costs in construction impact your entire project, and you’ll find that they cover a broad range of equipment, labour, and materials. Prelims can be either one-time costs or ongoing costs that begin at the project’s start and continue to its end.

The easiest way to define preliminaries in construction is as a group of items necessary for a construction company or contractor to complete a project but that won’t become a part of the finished work—site overhead, scaffolding, powering the site, etc.

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Construction companies, contractors, and owners account for preliminaries in their construction contracts because they often make up a significant percentage of the project and can be challenging to allocate across a project’s various activities.

Even though the owner might state which items qualify as prelims, it’s the contractor’s responsibility to claim the amounts for each of those items—they’re in the best position to estimate preliminary costs.

What are prelims?

We can break down a typical preliminary pricing document into three sections:

1. The costs involved in site establishment, including access permits, land take, site accommodations like welfare facilities, etc.
2. Running costs, including heating, lighting, power, etc.
3. Costs required to hand over or shut down the contract, including demobilising site offices, health and safety files, etc.

There are also preliminary costs that you can’t easily assign to a work section that you can still typically include in the prelims. For example:

• Provisional sums
• A general allowance for risk
• Site security
• The costs of design work
• Utility supplies

Related article: How to upgrade your construction document management with software

What are preliminary percentages in construction?

Preliminary costs can apply to any project of any size. In some cases, especially for relatively small jobs, it’s generally acceptable to include prelims as a percentage of the overall project cost rather than pricing each item separately. These percentages vary drastically based on location, the project’s scope, etc., starting as low as around 5% to over 15%.

Further read: How to Go Digital with Your QHSE

What do preliminaries in construction include?

The list of preliminaries in construction is an extensive one and can include costs related to every aspect of your project. There are, however, many common items that you can find in the preliminaries section of any construction contract.

Planning and design costs

Every construction project requires planning the work and creating and maintaining schedules, and it’s not possible to assign all of these prelim costs to just one work section. You also have to consider the added costs for reporting on the schedule progress as required by the owner.

With more contracts becoming collaborative, contractors are taking on more and more design work to put their material and methods expertise to use. All of this design work can expand across multiple work sections when determining preliminary costs.

Mockup, testing, and sampling costs

Construction companies and owners often need various contractors to supply mockups to see how portions of a project will look once they’re completed. The costs of those mockups, whether physical or virtual, can be included as prelims.

You can also include other processes, like slump testing and moisture sampling, as preliminaries since you have to test many materials to ensure they’re fit for use for your project.

Site-based services

Every construction project has elements to improve site efficiency, like creating access roads and controlling erosion. These projects also have environmental responsibilities to comply with relevant regulations.

In addition, your construction project might impact adjacent structures and their neighbours, meaning that contractors need to account for costs that mitigate damage and disturbances. Preliminaries in construction cover all of these site-based costs.

Management and administrative costs

These prelim costs include paying people who work on behalf of the whole project and not on just specific portions, like project managers and stakeholders.

You should include these costs as preliminaries in your construction contract for two reasons: It offers transparency to the owner and allows contractors to accurately account for the management and administrative costs.

Keep up with your preliminaries with LetsBuild

Preliminaries in construction contracts are necessary to deliver a finished project while maintaining your ideal profit margin. Construction companies, contractors, and project managers must account for all prelims in their contracts—overlooking these costs can lead to disputes down the road and overrun your contingencies.

However, construction professionals often end up lost in a sea of information, and it’s easy to overlook simple prelim costs that can add up quickly, resulting in a loss of contingency or profit. With LetsBuild, you can digitalise your processes to track everything on your construction site in real time.

Learn more about how digitising your organisation can improve performance by up to 47% with our free ebook, or schedule your demo of LetsBuild to see how we can help you gain complete control of your construction preliminaries, processes, and more.