Are General conditions considered cost of work?

7 months ago

We are a General Contractor and the owner has disallowed The project manager’s cost because under cost of work definition it states that home office personal are not considered under cost of work.
We followed the matrix for General conditions outlined in the specifications and gave a breakdown of the PM cost.
We believe that General Conditions are not to be considered as cost of work.

Senior Legal Associate Levelset
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The costs that are billed for a construction project will generally fall into a few different categories. And, it’s extremely common for the contract to prohibit including certain costs in one category, then to allow the recovery of those costs separately in a different category. Honestly, that’s just good common sense so that items can’t be billed twice under separate categories.

So, while the terms that break down “direct costs” might prohibit the inclusion of project manager’s fees in that category, the project manager’s fees might properly be included in another section – like the general conditions – if the contract allows for it.

Every contract is different, of course. So, if you find yourself at loggerheads with a customer, it might be helpful to have an attorney review your contract to get their take on it. They’ll be able to review the relevant documentation and help communicate your stance to the customer, if necessary.

For more on the basics of general conditions: Understanding the General Conditions in a Construction Contract.

Disclaimer: The information presented here is not legal advice and should not be construed as such. Rather, this content is provided for informational purposes. Do not act on this information as if it is advice. Further, this post does not create any attorney-client relationship. If you do need legal advice, seek the help of a local attorney.
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