General Conditions of Contract: Complete Guide with Meaning, Types & Examples

In the real estate sector, the construction process is quite complex to manage and navigate around, as it involves a lot of steps and procedures. In these steps, the general conditions of the contract are quite significant, since they direct all the parties involved about the project’s progression and costs.

Moreover, these general conditions of contract include numerous operations and indirect costs related and unrelated to the project. However, with so many complexities associated with this proposal, it can be quite difficult to formulate and execute. 

For that reason, we have listed everything you need to know about these conditions to produce a solid one yourself. So, without any further delays, read ahead!

What are General Conditions of a Construction Contract?

The general condition of contract is the legal written document that mentions the contractual terms that define the relation between the owner, contractor, and an architect. It includes the roles and responsibilities of the construction contract parties, important dates, payment terms, how to handle delays, changes to the work, and how claims as well as disputes will be handled. 

By doing this, all parties involved have a written declaration of the project’s timeline. This document also establishes the project’s administration duties, obligations, and steps that are needed to achieve certain targets within the specific timeline. 

The general conditions also represent the overall costs that are provided for the infrastructure and resources to the parties, while stating the entire journey of the construction project. 

Notable Features of General Condition of Contract

One of the main elements that make these general conditions of contract an integral piece in the construction process is their foundation. This proposal covers all the important factors that are useful for the project’s completion while avoiding any hassles. To give you a better understanding, we have mentioned a few of them in this section. 

1. Responsibilities of contractors: This document outlines the roles and responsibilities of the contractor, the quality standard they are required to pull through, and the building codes.

2. Work’s scope: They make sure that all parties involved understand the project’s goals and objectives thoroughly. Moreover, under this, you list the work required to be completed.

3. Scheduling of the project: The details of the specific timeline also need to be included in the general conditions of the contract. It includes milestones and deadlines related to the process.

4. Terms of payment: Another thing that needs to be added in this document is the schedule of payments, the conditions under which these payments will be released, along with the retainage requirements. 

5. Changes in order: This refers to the procedures that are required and included for taking care of all the contract terms and their work scope, including how the documents will be approved and documented.

6. Resolution of dispute: Under this, the general conditions of contract pertain to the preventive measures that the parties can take to resolve any issue that arises, like mediation or arbitration.

7. Insurance: While working on major projects, one is required to cover all the insurances and bonds. This is because the general conditions ensure the protection of the project against risks and challenges. 

8. Security and compliance: It helps in maintaining the safety and protection of the project by addressing the security protocols and ensuring that the regulatory compliance has been met with the legal standards. 

9. Conditions of termination: Put the contract’s conditions across the document, including the procedure and penalties the parties need to bear for terminating the entire contract. 

10. Warranty: This written record also states the warranties for the standard of work that needs to be practiced, along with the guarantee of workmanship and materials. 

Detailed Elements of General Conditions of Contract

We told you various features of the general condition of the contract; however, there are certain elements that are present in this written arrangement. In this part, we have mentioned all the elements in detail.

1. Project Management: It’s the core function of the general conditions of the contract. They ensure seamless transparency and communication is maintained throughout the project.

Aspects include:

• Roles and responsibilities
• Communication protocols
• Reporting requirements
• Meeting schedules
• Documentation process
• Submittals process

2. Site Management: In this, the details are provided for how the construction site needs to be accessed and managed by all the parties involved. Further, it affects the method and time of the operation and costs.

Aspects include:

• Site access
• Work hours
• Maintenance of sites
• Waste removal
• Environmental compliance
• Security protocols
• Temporary facilities

3. Permits, licenses, and regulations: This section entails the individuals or people responsible for issuing licenses and permits that further comply with the legal building standards. 

Aspects include:

• Permit acquisition
• Licenses
• Regulatory compliance
• Approvals
• Inspections
• Post-construction certificates

4. Insurance and bonding requirements: Under this section of the general conditions of contract, there is a coverage limit that the contractors must comply with in terms of the general conditions. 

Aspects include:

• General liability insurance
• Workers’ compensation insurance
• Professional liability insurance
• Performance bond
• Bond of payment
• Builder’s risk insurance

5. Order of change: Altering a project is quite important, and there needs to be a certain guideline individuals or parties can refer to. It includes how orders can be made and the approval or disapproval.

Aspects include:

• Change order procedure
• Cost adjustment
• Stoppage of work
• Documentation

6. Terms of payment: This particular section entails how a payment will be scheduled and then further made. It means that this section will carry the payment terms and conditions for transparency.

Aspects include:

• Schedule of payment
• Invoicing 
• Retainage
• Final payment
• Consequences of delayed payments

7. Resolution of disputes: Another vital thing to add in the general conditions of the contract is the method to resolve disagreements and how to proceed with the project in the best interest of all parties.  

Aspects include:

• Negotiations
• Meditations
• Arbitrations
• Litigation
• Fees and expenses

8. Project warranty and closeout: At last, you must include the closeout dates for completion, punch lists, contractor’s warranty, and transfer of ownership of the project beforehand to avoid any future delays.

Aspects include:

• Substantial completion
• Final completion
• Punch lists
• Ownership transfer
• Warranty of contractor
• Final inspections
• Final documentation

By including the above-mentioned pointers, you can easily create and produce a general condition of contract.

Importance of General Conditions of the Contract for Construction

General conditions of the contract for construction are of core value for managing and executing the entire project with precision and dedication. It helps in reducing misunderstandings while ensuring that the parties are transparent about their duties. 

To show you how it actually works, we have listed all the reasons ahead.

• Allows you to avoid and manage all the disputes that might occur.
• Maintains transparency for all the parties involved. 
• Ensure the projects are in compliance with the legal and quality standards. 
• Assists in maintaining and tracking the overall project process.
• Ensures the deadlines are met under well-defined conditions. 
• Protects the interests of all the parties involved in the project. 

This is why it’s always better to include the general conditions of the contract in your project management strategy.

How to Estimate the Costs of General Condition of Contract?

Estimating the costs for creating the general condition of the contract allows the involved individuals to understand and delve into the ins and outs of the project. Moreover, it gives a rough budget to everyone involved, making them approve or reject these plans. 

In this section, we have mentioned how to estimate the costing for general conditions of the contract for construction for you to employ a detailed estimate. 

1. Establish a set of general conditions to act as the foundation of the project. 
2. Include everything like the office expenses, costs for temporary utilities, permit fees, etc. 
3. Create a project manual with construction contracts and project details.
4. Add in the specific requirements essential in the cost estimate, like location, weather conditions, and access to the site.
5. Make use of the job costing data from the project from earlier. 
6. This historic data will help in calculating the realistic budget approximation. 
7. Combine all the above-mentioned factors to produce comprehensive data. 

Once it’s done, this budget will offer a reasonable overall estimate of the general conditions of the contract.

Additional Things Included in the General Condition of Contract

Other than the usual necessities, you can also include and make use of the following mentioned categories in your general conditions of contract.

Small tool charges	Jobsite trailer and utilities
Superintendent costs and salaries	Safety costs
Site administrative costs	Project accounting
Field computer services	BIM services
Dumpster	Clean-up
Job signs	Photographs
Site security personnel	Site camera
Webpage	Web camera
Mobilization	Street cleaning
Portable restrooms	Raw materials

By adding these things into the general conditions of the contract for construction, you can really diversify the document.

Difference Between General Conditions vs. General Requirements

It’s quite common to get confused between the construction terms like general conditions and general requirements. Especially as a new or upcoming contractor trying to get their hands into construction. Read ahead to learn the difference between the two!

GENERAL CONDITIONS	GENERAL REQUIREMENTS
People involved in the management of the project.	Specific things for the administrative purpose of the project.
Such as superintendents, project managers, field staff, project executives, and engineers.	Like the LEED, scheduling requirements, submittals, permitting, daily logs, RIFs, meeting minutes, progress meetings, etc.
It also involves modes of management requirements.	These things apply indirectly to the budget.
For example, field office, supplies, raw materials, telecommunications, etc.	This cost is added to the overall budget.

Now, you can easily tell the difference between the two construction terms, general conditions and general requirements. 

Types of Templates Needed for General Condition of Contract

There are multiple templates available for creating a successful general conditions of contract document. Keep reading to find, in detail, about these three template options you’d require to achieve this. 

• Proposal Template: This is the initial project document required for telling the parties or sponsors involved about the idea of the construction.

Core things to include:

• Introduce the parties with background information. 
• State the project’s objective and purpose.
• Highlight the unique factors.
• Include how the money and budget will be utilized.
• Ways how companies will benefit from this merger.
• Finish with a call to action with a follow-up request.

• Estimate Template: Once your proposal is chosen, the next step is informing all the individuals about the rough or approximate budget of the project.

Core things to include:

• Details about all the involved parties. 
• Clear details of the project with a description. 
• Detailed items and materials, ordered for the project. 
• Quantity and prices of each raw material.
• Important terms and conditions of the contract.
• Payment terms and details for the project. 
• Include the estimate’s validity period.

• Schedule Template: It is the most vital template as it includes all the different timelines for various factors of the construction. 

Core things to include:

• Each task with details and using brevity.
• The timeline is expected with deadlines.
• Information about the resource allocations. 
• Defined milestones and achievements. 
• The project’s blueprint with images. 
• Breakdown of the process agenda.
• Process for tracking various phases. 
• Include payment details and parties.

By including these things in your document, you will be able to crack more deals and projects in a hassle-free way. 

Common Mistakes to Avoid in General Conditions of Contract

It’s always better to look at the usual errors made while creating a project’s contract so that you can avoid the same in your work. For this reason, we have listed all the possible things you can be aware of while producing the document. 

• Use precise language, as it can really create misunderstandings. 
• Avoid compliance issues by accounting for all the regional and local regulations.
• Mention all the parties, sources, and instruments involved, as it will be easier to estimate prices.
• Do not forget to add all the funds, as they can lead to cost overruns and delays in results. 
• Providing clear solutions for resolution of conflicts and issues.

Wrapping Up

General conditions allow people involved to get a rough approximation of the project’s outline and timeline. Moreover, it reflects the expectations and responsibilities of all the parties involved. These conditions of a contract are of core importance for successfully achieving the management and execution of any project. 

Frequently Asked Questions