Concrete Terms — February 2013

Construction and Real Estate

February 05, 2013
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General Condition Costs: How to compare, monitor, and negotiate the “black hole” of construction costs.
 
Contractors realize most of their customers do not understand which costs are included in General Conditions. Each contractor defines General Condition costs differently, making it even more confusing.
 
In a cost-plus fee project, contractors have an incentive to shift office overhead costs to General Condition costs as a method of increasing profit. Non-project costs become billable costs by inserting them in General Conditions. A contractor might also categorize some of the General Condition costs as direct costs to increase profit. Shifting costs out of General Conditions gives the appearance that General Conditions are lower, though the total project costs do not change.
 
Concrete Terms was created to give busy construction and real estate attorneys quick and practical information they can use to serve their clients.

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Length: 2 pages (PDF 711 kB)

 

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