A building site is a temporary outside factory… producing a million dollar, or more, prototype… so the cost of setting it up and running it is often bigger than the cost of any other single trade.
A cost plan report or a Builder’s quote will always include a section or trade called “Preliminaries”… or something similar. This, I reckon, is the most important part of the cost plan or quote.
And, on most projects the builder’s preliminaries, supervision and site costs are one of the most expensive parts. For example : on a 2 storey new commercial project the Builders tendered preliminaries were over $390,000, and that was nearly 13% of the construction cost – plus profit was extra!
So what are they and why do they cost so much?
Setting up a building site for 6 or 12 months, or more, is like setting up a new factory or workplace outside and in the weather (after, all, it is a temporary factory that produces a building) that has to perform, produce and be safe… and then shutting it down and walking away.
All projects have this cost and some sites & projects are more expensive to set up, run and manage than others – for example a multi-level CBD project on a tight & tricky site will be more expensive to run than a single storey house on an outer suburban open greenfield site.
And so, the costs of building a building are not solely related to the amount of bricks & mortar alone. In other words, you will pay for more than just the things that get nailed down and that you get to keep.
To get the job done, a builder must allow for the cost of setting up a safe, effective and workable building site. They must run, organize, manage and supervise it.
As well as that there are other essential costs off the building site. There is all the office paperwork, the cheque writing (or electronic funds transfers), finance costs, photocopying, letter writing, plan printing, contracts, administration, permits, insurances, computers, cars and so on.
Typical Preliminaries Items
Here is a list of items typically included in Preliminaries when pricing a project.
Establishment of the site (Getting the site up and running… and then shutting it down)
- Site survey,
- Set out of the works,
- Connections of temporary power, water, telephone,
- Toilets, etc., sheds, offices, stores, other amenities,
- Security, access & safety rails, anchors & edge protection, tarps, hoardings, covered ways, dust screens, fences, guard rails, gantries, & the like,
- Scaffold, lifts and cranes, supports, hoists, platforms, plant and equipment,
- Roads, paths, tracks, footways,
- Dilapidation surveys, photos, records,
- Signboard, noticeboard,
- Soil tests,
- Authority charges,
- Setup & de-mobilisation, etc.
Insurances, permits, paperwork, etc.
- Obtaining and maintaining insurances, permits, fees, contracts
- Inspections, tests, notices
- Bank guarantee
Running costs (Keeping the site going)
- Power & services, water, telephone, tools, deliveries, first aid
- Documents, dilapidation surveys, photos, records, access, crossover, deposits, fees, de-watering, parking, etc.
- Safety equipment, hazard & traffic management, safe-working requirements, health/safety records & analysis, supervision & training, induction, protective clothing; & the like
- Security, protection, tarps
- Scaffold, supports, cranes, lifts, hoists, plant, equipment
- Hoardings, covered ways, dust screens, fences, guard rails, gantries
- Roads, paths, tracks, footways, road crossing
- Protect existing landscaping, structures & surfaces, etc.
- Hire – Amenities and minor sundries, sheds / storage / offices
- Site bins and cleaning
- Client meetings.
- Charts, programs and schedules to show and help maintain progress of trade and Subcontract organisation.
Final clean & handover (Some costs at the end of the job…)
- Final clean – labourer, bins, bobcat, cleaner, disposal
- Documentation, manuals, tests, guarantees, warranties
- Site dis-establishment and clear
- Labelling, handing over of keys.
Supervision, labourers, etc. (…A very important and expensive cost)
- Site supervisor
- Construction Manager
- OH&S Officer, shop steward
- Site labourers
- Clerk of Works
- Induction and training
- Administration (both, on & off-site)
Overheads and other costs (…The business side of it)
- Attendance & management
- Off-site expenses, administration
- Finance and cashflow,
- Liability for making good defects after practical completion
- Profit and risk.
Note: These items may each be priced as a fixed cost, $-per-hour, $-per-day, $-per-week (e.g. Amenities hire, or on-site supervision labours), area based (eg. building cleaning prior to handover), or based on the project size and cost (i.e. Profit).
In other words – some items may be :
- fixed costs,
- some may be time based or time sensitive,
- some may be area or size or volume based
- some may be location or site sensitive and
- others percentage based
… or a combination of these.