Preliminaries in Construction: Everything You Need to Know (2024)

Understanding and managing preliminaries is crucial for ensuring the smooth execution and financial success of a project. Preliminaries refer to the essential preparatory work and associated costs that occur before the main construction activities begin. These include site setup, site accommodations, securing permits and temporary utilities, and implementing health and safety measures.

Construction companies face unique industry-specific practices and challenges, such as the importance of construction proposals, effective onboarding processes, and managing preliminary costs in construction contracts.

While often overlooked, preliminaries are vital in laying the groundwork for efficient project management and compliance with regulatory standards. This blog will explore everything you need to know about preliminaries in construction, offering insights into their importance, calculation methods, and best practices for incorporating them into your construction contracts.

What Are Preliminaries in Construction?

Preliminaries refer to the initial costs and activities required before the main construction work begins. These include site setup, securing permits, temporary structures, utilities, insurance, health and safety measures, and other costs involved such as provisional sums and site security costs. Preliminaries are essential for creating a safe and organised environment, ensuring the project complies with regulations, and preparing it for efficient execution.

They are typically outlined in the preliminary section of the contract documents and form part of the overall budget as they lay the groundwork for the construction process. Effective management of preliminaries helps prevent delays and cost overruns, contributing to the project’s success.

Who calculates the preliminaries in construction projects?

In construction projects, the project manager or main contractor is typically responsible for calculating the preliminaries as part of the bill of quantities. Including costs for project managers in preliminary budgets is essential to ensure transparency, accountability, and to avoid financial disputes throughout the construction process.

This is because the main contractor comprehensively understands all the key elements of the project’s start up. Accurately calculating preliminaries is crucial for developing a fair and representative bid, ensuring that all necessary costs are accounted for.

As part of effective construction project management, you should include a detailed set of preliminaries that covers everything required to complete the project. By including preliminaries in the scope of work, clients, contractors, and subcontractors gain a clear and holistic view of the project scope. This transparency helps prevent unexpected costs from arising later, ensuring smooth project execution for clients and the construction business.

Construction Preliminaries: List of Examples

Construction preliminaries encompass various tasks and costs to prepare a construction site and manage the project effectively. Here are some examples of prelim costs:

1. Site Setup: Installing temporary fencing, access roads, site offices, storage areas, and welfare facilities such as rest areas and sanitation.
2. Permits and Approvals: Securing necessary building permits, environmental clearances, and other regulatory approvals.
3. Insurance: Obtaining insurance for the project, including public liability and contractor’s all-risk insurance.
4. Temporary Utilities: Setting up temporary water, electricity, and sanitation facilities for the site.
5. Health and Safety Measures: Implementing safety protocols, signage, and first aid stations.
6. Environmental Protection: Erosion control, dust suppression, and waste management plans.
7. Site Surveys: Conducting site investigations, soil testing, and boundary surveys.
8. Mobilisation: Arranging for materials, machinery, and workforce delivery to the site.
9. Communication Facilities: Installing temporary telecommunication lines or internet access for the site office.
10. Scaffolding and Hoarding: Erecting scaffolding, hoarding, and access platforms are required during construction.

Usual percentage of preliminaries in construction contracts

To simplify the calculation of preliminary costs, contractors often charge these costs as a percentage of the overall construction contract. Ongoing costs are essential expenses that continue throughout the project’s duration. Although there is no fixed rate, the usual percentage of preliminaries ranges between 5% and 15% of the total contract value. Depending on the project’s scope, it might be more effective to charge the total preliminaries as a lump sum rather than a percentage. Larger, more complex projects typically demand higher preliminary costs for administration and project management.

Public infrastructure projects may also incur greater preliminaries due to stringent regulatory compliance. Additionally, the location of a project can significantly influence the percentage of preliminaries, as some sites require more access permits or more extensive preparation or setup. Projects with higher risks also demand more mitigation, which can increase preliminary costs.

Conduct thorough calculations to the added costs and ensure you’re adequately covering these costs. A detailed cost estimation and budgeting process is crucial, and using construction accounting software can help you track project expenses and boost profitability.

What are preliminary percentages in construction?

Preliminary percentages in construction refer to the proportion of the overall project budget allocated to preliminary costs for the entire project. These costs include site setup, permits, insurance, temporary utilities, and management fees. Typically, preliminary cost percentages starting from 5% to 15% of the total project cost, depending on the project’s complexity, location, and duration.

Accurately calculating these percentages ensures that all necessary preparatory work is funded without compromising the main construction budget. By allocating appropriate preliminary work sections and percentages, contractors can mitigate risks, avoid cost overruns, and make sure a smooth project execution from start to finish.

What do preliminaries in construction include?

Preliminaries in construction encompass a range of costs and activities essential for setting up and managing a construction project before the main building work begins. These preliminaries typically include:

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Planning and Design Costs: 

This covers the expenses related to project planning, architectural design, engineering, and consultancy fees. It also includes the development of project documentation, drawings, and specifications.

Mockup, Testing, and Sampling Costs: 

Before construction starts, mockups, material samples, and testing are often required to ensure design specifications and quality standards compliance. This helps in assessing the feasibility and durability of materials and construction methods.

Site-Based Services: 

These include temporary infrastructure such as site offices, storage areas, utilities (water, and electricity supply, sanitation), security, and site access roads. It also covers health and safety measures like signage, barriers, and first aid facilities.

Management and Administrative Costs: 

This includes the cost of site management, including the salaries of site managers, supervisors, and administrative staff. It also covers project management software, communication tools, insurance, permits, and other regulatory compliance costs.

Preliminaries in a construction contract: essential components

While there’s no legal requirement to include preliminaries in construction contracts, omitting them can make it challenging for clients to understand the project’s total cost fully. Most clients expect provisions and clauses related to administration and project management, site setup and preparation, design and approvals, and to health and safety files and, safety, and environmental (HSE) regulatory compliance.

The Royal Institute of Chartered Surveyors is new measurement rules offer valuable resources for those seeking a construction preliminaries template. These documents help estimate costs and identify what qualifies as a preliminary expense. The understanding preliminaries templates can be customised to fit your specific construction contracts.

Additionally, construction accounting software can streamline tracking expenses, monitor project progress, and manage time effectively, making sure that your construction projects are completed within allocated time and budget. For further guidance, explore resources that cover all aspects of managing your construction business.