What are preliminaries in construction? Costs, examples, and tips

Published Tuesday 18 November 2025

Table of contents

• What are preliminaries in construction?
• The importance of preliminaries in construction
• Preliminaries in a construction contract: essential components
• Managing preliminaries for construction business success
• FAQs on construction preliminaries

Key takeaways

• Calculate preliminaries as 5-15% of total project cost for quick estimates, but develop detailed itemised breakdowns for projects over £100,000 or those with unique site requirements to ensure accurate pricing and avoid undercharging.

• Include all project-wide support costs such as site facilities, project management, safety equipment, and temporary utilities in your preliminary calculations to prevent costly surprises and maintain profitability throughout the construction process.

• Present preliminaries transparently to clients with clear itemised lists that explain the value and necessity of each cost, building trust and reducing the likelihood of disputes during project execution.

• Track preliminary expenses in real time using construction accounting software and review actual costs from past projects to refine future estimates and maintain competitive yet profitable bidding.

What are preliminaries in construction?

Construction preliminaries are essential project costs that don't appear in the finished building but are necessary to complete the work. These costs support the entire project rather than specific construction phases.

Key characteristics of preliminaries:

• Project-wide costs: Support the entire construction process
• Temporary requirements: Needed during construction but not part of final building
• Essential services: Include site facilities, management, and safety provisions
• Separate from work sections: Different from materials and labour costs

Common examples include project management fees, on-site facilities, scaffolding, and temporary lighting.

Preliminaries can be fixed, one-off or ongoing costs. For example, you pay a project manager for the whole project, but an environmental assessment is a one-off fee. In a construction contract, preliminaries and work sections together describe the full project scope and all costs for each phase and the project as a whole.

Who calculates the preliminaries in construction projects?

The main contractor typically calculates preliminaries because they oversee all project components and can accurately assess total requirements.

Why contractors handle preliminary calculations:

• Complete project oversight: Understanding of all work phases and requirements
• Accurate cost assessment: Knowledge of site-specific needs and challenges
• Bid competitiveness: Ability to balance comprehensive coverage with competitive pricing

Develop your preliminaries to include everything needed for project completion. This ensures fair pricing and prevents costly surprises later.

Including preliminaries in your scope of work gives clients, contractors, and subcontractors a holistic view of the project. This helps you and your clients avoid unexpected costs later in the project.

Examples of preliminaries in construction

Preliminaries differ from business overheads – they are project-specific costs rather than general business operating expenses.

Common preliminary cost categories:

Administration and project management:

• Managing project fees and coordination
• Documenting quality assurance and progress
• Communicating with stakeholders and managing compliance

Site setup and preparation:

• Site clearing, grading, and excavation work
• Temporary offices, toilets, and welfare facilities
• Power, water, and utility connections

Design and approvals:

• Design refinement and engineering services
• Permit applications and council approvals
• Surveys, assessments, and regulatory compliance

Health, safety, and environmental compliance:

• Safety equipment and personal protective equipment (PPE)
• Safety plan development and implementation
• Environmental protection measures

Usual percentage of preliminaries in construction contracts

Construction preliminaries typically range from 5 – 15% of the total project cost, though complex projects may require higher percentages.

Factors affecting preliminary percentages:

• Project complexity: More complex builds need higher management costs
• Project size: Larger projects often justify detailed cost breakdowns over percentages
• Location requirements: Remote or challenging sites increase setup costs
• Regulatory demands: Public infrastructure projects require additional compliance costs

When to use detailed costing over percentages: For projects over £100,000 or those with unique site requirements, itemised preliminary costs provide better accuracy than percentage-based estimates.

Public infrastructure projects can incur greater preliminaries for regulatory compliance. Location can also influence the percentage of preliminaries in construction; some sites require more preparation or set-up than others. Of course, projects with higher risks also require more mitigation which can influence preliminary costs.

Calculate your own preliminary costs to avoid undercharging. Take time to estimate and budget accurately. Construction accounting software can help you keep track of projects and costs so you can increase profitability.

Preliminaries and generals in construction

Another way you might see preliminaries referred to is 'preliminaries and generals'. The preliminaries and generals in construction projects contracts will cover the general conditions and requirements necessary to execute the project – and the costs this will incur. Preliminaries combined with the work sections of a tender document outline everything there is to know about how the work will be completed.

The importance of preliminaries in construction

By providing pricing transparency and clearly outlining all necessary support costs upfront, preliminaries help prevent costly project disputes, aligning with the spirit of mutual trust and cooperation that modern contract frameworks like NEC4 emphasise.

Benefits of including preliminaries:

• Complete cost visibility: Clients understand full project requirements
• Dispute prevention: All costs agreed before work begins
• Project success: Proper planning reduces delays and scope changes

Risks of omitting preliminaries:

Projects without preliminary planning face significant cost overruns when essential services like site facilities, lighting, and project management aren't budgeted. These additional costs typically fall to both contractor and client.

Proper management of your preliminaries can contribute to project success. There's less chance of a dispute further down the line if all items have been costed and presented upfront. This can also help to prevent project delays that occur when work is paused due to a change in scope.

Preliminaries in a construction contract: essential components

While not legally required, preliminaries are industry standard and essential for transparent project pricing.

Client expectations typically include:

• Project management: Administration and coordination services
• Site preparation: Setup, facilities, and utility connections
• Design services: Plans, approvals, and regulatory compliance
• Safety compliance: HSE requirements and risk management

Excluding preliminaries creates pricing uncertainty and can damage client relationships when additional costs emerge during construction.

If you're looking for a construction preliminaries template, head to the Royal Institute of Chartered Surveyors' new rules of measurement. This set of documents will help you estimate costs, as well as identify what counts as a preliminary cost. The templates can be customised for your own construction contracts.

Meanwhile, accounting software for construction enables you to track expenses, keep an eye on project progress and time spent working, and deliver your construction projects on time and within budget. For more tips, explore our selection of guides covering all aspects of managing your construction business.

Managing preliminaries for construction business success

Getting your preliminaries right isn't just about accurate pricing – it's about running a smoother, more profitable business. Effective management of these costs helps build client trust, prevents budget blowouts, and keeps your projects on track.

Here are a few tips for managing your prelims successfully:

• Estimate accurately: While a percentage can be a quick guide, a detailed breakdown of each preliminary item is far more accurate. This ensures you don't undercharge and eat into your profits.
• Track costs in real time: Keep a close eye on your spending throughout the project. Using accounting software to track expenses against your budget helps you spot potential overruns before they become a problem.
• Communicate clearly: Be transparent with your clients. An itemised list of preliminaries shows them exactly what they're paying for, building trust and reducing the chance of disputes later on.
• Review past projects: Use data from previous jobs to refine your future estimates. Knowing what you actually spent on prelims for similar projects is the best way to ensure your quotes are competitive and profitable.

With Xero accounting software, you can track project costs, manage expenses, and see your financial performance clearly. This makes it easier to manage your preliminaries and keep your projects on track.

FAQs on construction preliminaries

Below are answers to common questions about construction preliminaries.

What's the difference between preliminaries and business overheads?

Think of it this way: preliminaries are the indirect costs for a specific project, like site security or scaffolding for one job. Overheads are the general costs of running your business that aren't tied to any single project, such as your main office rent, insurance, or marketing expenses.

Can preliminary costs be negotiated with clients?

Yes, they can be. Transparency is key. When you can clearly explain what each preliminary cost covers and why it's necessary for the project's success, clients are more likely to understand and accept them. A detailed breakdown is much easier to discuss than a single, vague percentage.

How do I justify preliminary costs to price-sensitive clients?

Break it down for them. Instead of presenting a lump sum, itemise the costs and explain the value behind each one. For example, show how proper site management (a preliminary cost) prevents expensive delays and ensures a high-quality result, ultimately protecting their investment.

What happens if I underestimate my preliminaries?

Underestimating your preliminaries can directly reduce your profit margin or even cause you to lose money on a project. It can also create serious cash flow issues if you have to pay for unexpected site costs out of your own pocket. Accurate calculation from the start is vital for your financial health.