What are construction prelims?
Preliminaries (or Prelims) in construction are a collection of estimated costs included in the contractor's tender agreement with the client.
You may also find preliminaries in contracts between main contractors and subcontractors.
Prelims cover all of the things required to complete the project that won't be included in the final handover or appear in the schedule of works. Some example costs might include equipment, labour, power units, or scaffolding. The potential list is extensive and it will vary from project to project.
In the past, it's been a rule of thumb that prelims need to come in at 13% of the total cost of the project (regardless of whether you're building a treehouse or a motorway). These days they tend to range between 11-15% of the project costs and can be even more.
Preliminary costs in construction
Preliminary pricing is usually presented as a document which breaks the costs down into three different categories. Titles may vary from one project to the next, but the concept is the same from one project to the next.
- Set up costs - this can include permit acquisition, staff accommodation, and site offices.
- Running costs - heat, light, power, security, or labour.
- Completion costs - removal of site equipment, health and safety docs, and external inspections.
It's important that these documents are meticulous and include (or as close to) everything required for the construction of the project. This helps maintain transparency between the contractor and the client and prevent potential disputes.
If items are left out of the prelims, the client is likely to assume that these costs are included elsewhere in the contract. If this happens, it can lead to a variety of issues which can heavily impact the contractor's profit margin.
What’s included in construction prelims?
The list of specific prelims and requirements can vary wildly depending on what's built and where it's being built. That being said, there are some general categories that are likely to be included in most large projects.
Planning and design costs
All construction projects require planning to some degree, and larger ones require regularly updated schedules. These plans then need to be monitored and reported on as specified by the owner or client. These costs can not be assigned to one particular work section as they have an impact on the entire project.
Before anything can be constructed on the project, visual mockups need to be created to make sure that the construction is suitable and that the client is happy with the design. These can be anything from 2D drawings to 3D or virtual models and are an essential part of the design process.
Many different materials are used on projects, and it's imperative that they are fit for purpose before installing them. For example, moisture levels might need to be tested in timber, or slump tests might need to be carried out to make sure that concrete is of the correct consistency.
Site based services
From the moment a project begins construction to the moment it's handed over to the owner, there are changes that need to be made to the site. Temporary roads might be required, site offices need to be put in place and then removed, and there may be environmental factors to consider.
Management and administrative costs
Payments to Project managers, site managers and other stakeholders. The people that work on behalf of the whole project and not just specific sections. Building this into the preliminaries shows transparency and helps the site contractor account for the cost.
Preliminaries and preambles
One final thing to note is the difference between preliminaries and preambles. These two things are often confused with one another; whilst they both appear in a tendering contract, it's important to understand that they are not related.
As discussed, preliminaries describe all of the costs to be considered in the construction of a project that is not included in the completed structure or a schedule of works.
Preambles, on the other hand, are simply an explanation of a document. In construction, you'll commonly find them in contracts, specifications, and the bill of quantities.
Some things you'll find in a preamble include:
- A description of the parties involved
- A summary of negotiations
- Tendering procedures
- Objectives of a project.
This list will vary depending on the context of the document in question.
Preliminaries make up an integral part of a tender, and it's important that the contractor collates a detailed list of everything they required to complete a project. Not only is this good ethical practice, but it also safeguards them from costly issues and disputes with the client.
A good preliminary document should lay out all the costs and show the workings of how they have been calculated. If contractors are uncertain of how much something is going to cost, then it's good practice to use industry standards as an estimate.
Thanks for reading! If you enjoyed this article and would like to learn more about the construction industry and/or Aphex, you can view all of our blogs and articles here.