General Condition of Contract Basics You Must Know
by Sam Chen
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In every construction project, beyond the blueprints and beams, lies a backbone of legally binding agreements that govern the project from start to finish. One of the most important—but often misunderstood—of these is the General Condition of Contract. These conditions shape the framework of responsibilities, timelines, and processes that guide project execution. Whether you’re a developer, contractor, or subcontractor, understanding these provisions isn't just helpful—it's essential.
What Is the General Condition of Contract and Why It Matters
The General Condition of Contract is the legal scaffold that supports construction project delivery. It outlines the rights, obligations, and procedures that all parties must follow. These provisions ensure transparency, promote accountability, and prevent chaos. Without them, a project would operate in a legal vacuum—where deadlines get ignored, costs balloon, and quality is left to chance.
The importance of these conditions can't be overstated. They impact everything from how disputes are handled to how payment is released. Essentially, they’re the rules of engagement for the entire construction team.
General Conditions vs. General Requirements
It’s easy to conflate general conditions with general requirements, but they serve different purposes. General conditions are contractual in nature—they're about the legal terms that govern relationships, timelines, and protocols. General requirements, on the other hand, are more technical; they include specifications such as material standards and workmanship quality.
Think of it this way: general conditions lay out the how of doing business; general requirements define the what of the work to be done.
What’s Included in General Conditions?
Project Management
General conditions often include provisions related to project coordination—scheduling, reporting, submittal process, communication protocols, and documentation standards. These rules help align stakeholders and keep the project moving like a well-oiled machine.
Site Management
From site access rules to environmental protection measures, site management clauses ensure the physical jobsite remains safe, organized, and compliant. They may also cover temporary facilities, fencing, and logistics.
Permits, Licenses, and Regulations
Obtaining the right approvals isn’t optional—it’s mandatory. General conditions specify which party is responsible for securing permits and adhering to building codes and local regulations, minimizing legal hiccups down the road.
Insurance and Bonding Requirements
Insurance clauses are the project’s financial safety net. They define what coverage is required (e.g., workers' compensation, general liability) and who bears the cost. Bonding ensures performance and payment security.
Change Orders
Construction is dynamic—changes are inevitable. Change order provisions establish how modifications to scope, time, or cost should be documented, approved, and executed without derailing the project.
Payment Terms
General conditions set the cadence for payments—when invoices are due, how they're approved, and what happens in the case of late payments. They also define retainage policies and conditions for final payment.
Dispute Resolution
Disputes can cost time and money. These clauses outline methods for resolving conflicts—such as mediation, arbitration, or litigation—before they escalate into legal showdowns.
Project Closeout & Warranty
Closeout procedures ensure that all loose ends are tied—final inspections, lien releases, and documentation. Warranty clauses protect the owner against defects for a specified period after completion.
How Contractors Estimate General Conditions
Estimating general conditions is as much an art as a science. It involves projecting costs for project support, administration, and risk mitigation.
Use Standard General Conditions as a Baseline
Many contractors start with a templated set of general conditions, such as those from AIA or FIDIC, to create a base estimate. This ensures no essential cost is overlooked.
Reference the Project Manual
The project manual is a goldmine of detail. It outlines unique owner requirements, regulatory obligations, and performance expectations that must be incorporated into the estimate.
Incorporate Project- or Site-Specific Conditions
Every site has its quirks. Estimators consider variables like site access limitations, urban noise ordinances, or climate concerns that could affect general condition costs.
Use Historical Job Costing Data
Looking back is often the best way to look forward. Contractors rely on data from past projects to benchmark costs and identify potential pitfalls.
Formulate the Final Estimate
With all inputs in hand, the estimator refines a comprehensive, tailored general conditions estimate—ensuring accuracy without undercutting profitability.
How General Conditions Affect Project Success
Robust general conditions are the bedrock of a successful build. They minimize ambiguity, reduce risk, and create a fair playing field. When drafted clearly and managed well, they lead to fewer disputes, smoother workflows, and happier stakeholders. On the flip side, vague or poorly defined conditions often result in delays, budget overruns, and legal entanglements.
A well-structured set of general conditions is not just protective—it’s proactive.
Integrating Technology with General Conditions
Modern construction management tools, such as GoBuid, are transforming how general conditions are tracked and enforced. From cloud-based platforms that streamline change order approvals to AI-powered tools that flag compliance issues, technology reduces human error and boosts efficiency. Digital contract repositories, real-time reporting, and mobile access make it easier for teams to stay aligned and compliant.
Integrating software solutions with general condition management isn’t just a smart move—it’s the new industry standard. 👉 Try all features for free 30 days
Conclusion
Understanding the general condition of contract is no longer optional—it’s a must-have for anyone involved in construction. With the right knowledge and tools, teams can unlock better collaboration, sharper cost control, and airtight risk management. When everyone plays by the same rules, the whole project wins.
FQA of General Condition of Contract
What is the General Condition of Contract in construction?
The General Condition of Contract outlines the legal and administrative framework that governs how a construction project is carried out. It sets expectations for roles, responsibilities, timelines, payment terms, dispute resolution, and more.
Why are General Conditions important in a construction contract?
General Conditions help manage risk, avoid misunderstandings, and ensure smooth coordination among stakeholders. They provide clarity on how the project will be managed and what happens when issues arise.
How are General Conditions different from General Requirements?
General Conditions focus on the legal and procedural side of the contract—things like payment, changes, and disputes. General Requirements, on the other hand, cover technical specs like materials and workmanship standards.
Who prepares the General Condition of Contract?
Typically, the project owner or their legal team prepares the General Conditions, often using industry-standard templates such as AIA or FIDIC, which are then customized for the specific project.
Can General Conditions be negotiated?
Yes, they can and often should be negotiated. Both contractors and owners review these clauses to ensure fairness, especially for large or complex projects.
What costs are included in General Conditions?
They generally include indirect costs such as site supervision, temporary facilities, security, permits, insurance, safety programs, and administrative expenses that support the project.
How do General Conditions impact the total project budget?
While not direct construction costs, General Conditions can significantly affect the project budget. Accurate estimation and management of these costs are crucial for profitability and project success.