Understanding Preliminaries in a Construction Cost Plan

Preliminaries are the cost of running the site rather than building the works. Site setup, welfare, scaffolding, site management, temporary services, insurances and everything the programme needs to happen at all. On most UK projects they sit at roughly 8 to 15% of construction cost, and they are the line a slipping programme punishes hardest.

They are also the part of a cost plan that clients skim past, because a summary sheet reduces them to one number. That number is where a good chunk of your risk lives.

What actually counts as a preliminary?

Under the RICS New Rules of Measurement (NRM1 at cost-plan stage, NRM2 when it becomes a bill of quantities), preliminaries are the contractor's cost of managing and servicing the works, kept separate from the labour and materials that go into the building itself. Bricks are a measured work item. The mortar silo, the crane that lifts them, the site manager who sequences the gang and the welfare cabin they clock into are all preliminaries.

Split them two ways and the whole line starts to make sense:

• Fixed (one-off) costs that happen once, whatever the duration: setting up and clearing the site, mobilising plant, connecting temporary power and water.
• Time-related (running) costs that clock up every week the site is open: the management team, crane and scaffold hire, cabin hire, security and site power.

That distinction is the most useful thing in the whole section.

How much should preliminaries be in the cost plan?

Budget 8 to 15% of construction cost as a starting point, then test it against the real job. A simple new-build on an open site with easy access sits at the lower end. A phased refurbishment of an occupied building, a tight urban plot or a long programme pushes you toward the top, and sometimes past it. Treat the percentage as a sense-check. The priced build-up is the answer.

Here is why the time-related half matters so much. Say the running prelims on a mid-sized commercial job come to £9,000 to £12,000 a week. A six-week overrun, which is nothing unusual once a steel package or a statutory connection slips, adds £54,000 to £72,000 before a single extra brick is laid. None of that shows up if you carried preliminaries as a flat percentage, because a percentage has no clock attached to it.

Two things people fold into prelims by mistake: contingency and margin. Contingency, usually 3 to 5% early in design and falling as the drawings firm up, covers the unknowns. Overheads and profit are the contractor's return on the job. Neither one is a preliminary, and mixing them in hides what is really moving your cost plan.

Why split fixed and time-related if it is more work?

Because when a project runs late, and plenty do, the extension of time argument turns entirely on the time-related figure. If the contract, usually a JCT or an NEC4 form, carries a clear weekly rate for running prelims, an extension of time already has a price everyone agreed. If it does not, you negotiate that number under pressure with the programme against you.

I won't sign off a cost plan that carries preliminaries as one percentage with no build-up behind it. Plenty of surveyors will, because a round number is quick and it looks tidy on the summary. On a job that runs late, that tidy line is the one you cannot defend.

We learned that the expensive way. On an early scheme we took a contractor's prelims as a single lump with no time-related breakdown, and when a key package slipped by several weeks the argument over the extension of time was far harder than it needed to be, because nothing on paper separated the running costs from the one-off set-up. We price them apart now, every time.

What pushes preliminaries up on a Stockport town-centre site?

Access and space, mostly. A lot of the work around Stockport town centre sits on tight plots hemmed in by the Underbanks, Chestergate and the railway viaduct, with almost nowhere to store materials and a single shared access off a live street. That forces traffic management, just-in-time deliveries, a smaller laydown and often a crane where a cheaper telehandler would do on an open site. Every one of those is a preliminary, and most of them are time-related.

The weather does its bit too. A Greater Manchester winter loses days to rain, so a programme that stretches from October into spring carries more weeks of running prelims than the same job started in May. On the refurbishment side, a lot of the local stock is older mill and mid-century town-centre buildings where you cannot see what is behind the wall until you open it, which is exactly the kind of unknown that stretches a programme and the preliminaries with it.

How we price and control preliminaries

We build the preliminaries up from the programme, not down from a percentage. That means reading the contractor's own build-up and testing the weekly rates against the real programme, then making sure the CDM 2015 duties, the welfare standards, the security and the temporary works are actually costed rather than assumed. Our cost management and quantity surveying team does this alongside the project management team who own the programme those costs hang off, so the two never drift apart.

On funded schemes it matters even more, because a lender's monitoring surveyor will test the prelims line hard before releasing each drawdown. That is where our fund monitoring work and the cost plan have to tell the same story.

Want a second pair of eyes on a cost plan before you commit, or a fee proposal for a scheme you are pricing now? Talk to our surveyors. We would rather find the soft number before the contract is signed than argue about it after.