What are Preliminaries in Construction?

In the construction industry, getting clarity on costs and processes is crucial to delivering high-quality work on time and within budget. One term that you may be familiar with is ‘preliminaries’. For contractors and subcontractors, understanding what preliminaries are and how they’re calculated is extremely important when it comes to effective project management.

At Contractwise, we’ve spent many years working in the construction industry, specialising in CIS compliance. We protect contractors and subcontractors with a wide range of services, including payroll audits that eliminate HMRC reclassification.

In this article, our expert team will explore the meaning of construction preliminaries, explain how costs are expressed as percentages and outline practical ways to keep projects on budget. Whether you’re preparing a tender or reviewing costs, this comprehensive guide will help you understand how preliminaries impact construction projects.

Read on for more information…  

What are preliminaries in construction?

In construction, preliminaries refer to all the essential tasks, activities, provisions and costs that support a project but are not directly part of the physical building work. A good way to think of preliminaries is that they enable work and set-up functions that allow the construction process to happen smoothly and safely while remaining compliant with industry regulations.

Preliminaries cover a wide range of requirements, including site establishment, temporary facilities, plant and equipment and health and safety standards. All of these things tend to be project-wide rather than connected to individual construction tasks - meaning they do not show up in the way as direct labour and materials.

Due to the fact that preliminaries are vital for the delivery of a project, they are usually accounted for early in cost plans, and bills of quantities (BoQ) and these are often expressed as a percentage of the total construction cost.

What are preliminary percentages in construction?

In practice, many contractors apply a preliminary percentage; typically, this is a fixed portion of the contract sum that is expressed as a percentage to cover groundwork and project-wide costs. Preliminary percentages are usually included in tenders along with cost estimates to ensure that all necessary non-work elements are financially accounted for.

The exact percentage used will vary depending on a wide range of factors, including:

• Project size and complexity
• Contract type
• Duration of work
• Site conditions
• Client requirements
• Health and safety regulations

Common preliminary percentages will range from 5% to 15% of the total contract sum. Larger or more complex projects might require a higher percentage to reflect the increased need for project management.

Using a percentage method allows contractors to take a systematic approach to pricing, giving clients a benchmark of preliminaries that can be applied across multiple bids. However, it is important that percentages are justified with a detailed list of items to avoid over or underestimating the costs.  

Examples of preliminaries in a typical construction job

Some key examples of preliminaries would include the following:

Planning and design

This includes:

• Project meetings and coordination: This is time spent on planning sessions, stakeholder meetings, site inductions and more.
• Design compliance and approvals: Costs associated with securing regulatory approvals, architectural reviews and design adjustments.

These elements are essential to ensure the project is well-coordinated and has a plan long before any work physically begins.  

Mock-ups, testing and samples

This includes:

• Material samples and testing: This includes procuring samples of finishes and arranging quality tests in line with the project’s specifications.
• Prototype mock-ups: Building example sectionsof critical elements to demonstrate compliance with performance standards.

Mock-ups and samples help mitigate risk by confirming that materials and methods meet contract and regulatory expectations before lots of money is spent.  

Administration costs

This includes:

• Site management and staff: Salaries for site managers, supervisors and administrative personnel who oversee daily operations.
• Office facilities and equipment: Costs for on-site offices, communication systems, computers and stationery.
• Record-keeping and reporting: Time and resources used to manage project records, health and safety documentation, subcontractor management and progress reports to clients.

These costs are not directly tied to construction labour or materials, but they are all fundamental to the successful delivery of construction projects.

Importance of construction preliminaries

Preliminaries play a critical role when it comes to managing a construction project. Some of the main reasons why they are so important include:

• Cost control: Preliminaries ensure that indirect costs are not overlooked, helping give a fuller picture of what is being spent. Without them, contractors run the risk of under-pricing their work, which can impact profit margins.
• Resource allocation: Planning high-level resources allows for better scheduling of staff and equipment. It also helps to avoid clashes between trades and project downtime.  
• More competitive tendering: When contractors clearly define preliminaries, they are able to core effectively. This helps with transparency for both clients and contractors when it comes to evaluating bids.
• Risk management: Preliminaries should include activities relating to health and safety. Addressing these elements upfront reduces the chance of an accident occurring during the project.  
• Transparency and accountability: Detailed preliminaries provide important clarity on what is being charged and why. Clients will know what they are paying for, and contractors can demonstrate that their pricing is based on things they need and not just guesswork.  

Ways to keep a construction project on budget

There are a wide range of ways that construction projects can remain on budget. This includes:

• Develop realistic preliminaries: Base preliminary percentages on the scale of the project, its complexity and historical data, not assumptions.
• Define scope clearly: Ensure the contract and BoQ clearly specify what is included in preliminaries.
• Use detailed cost tracking: Monitor preliminary expenditure separately so any overruns are detected as early as possible.
• Benchmark against similar projects: Compare preliminaries and other cost items to previous projects to help with costings.
• Manage design changes: Control changes that affect preliminaries, such as additional compliance requirements.
• Improve procurement: Negotiate fairly for temporary works, site facilities and more without impacting quality.

For construction firms working within the CIS framework, Contractwise is here to help. For more information on our range of services, contact our team today.