General Conditions and GC Fee Benchmarks in 2026: What Percentage Is Actually Fair, and How to Compare Two Bids That Are Not Comparable
Owner Advisory · Bid Evaluation · Updated August 2026
General Conditions and GC Fee Benchmarks in 2026: What Percentage Is Actually Fair, and How to Compare Two Bids That Are Not Comparable
General conditions is a monthly rate times a duration, not a percentage. Once you see it that way, most of what looks like a cheaper bid turns out to be a shorter schedule assumption. Here is what a contractor actually keeps, what belongs in the line, and the ten item bid form that forces both bidders onto the same page.
The Short Answer
Fee alone never tells you whether a bid is real. CFMA's 2025 Benchmarker, on 1,558 companies, puts the Industrial and Nonresidential segment at 4.4 percent net income before taxes with 7.3 percent SG&A. That means roughly 11.7 percent of revenue is what fee plus home office actually has to cover, and only 4.4 points of it is profit. A contractor quoting a 3.5 percent fee is not making 3.5 percent. General conditions itself is duration driven, not value driven, which is why the percentage falls as project value rises and why every schedule extension claim hits that line first.
Key Takeaways
- General Conditions is a contract document, not a cost category. AIA A201-2017 is literally titled General Conditions of the Contract for Construction. What is on your bid form is Division 01 General Requirements plus jobsite indirect staffing. Confusing the two is why bid comparisons go wrong.
- AIA A102 gives the owner 100 percent of GMP savings by default. There is no savings share in the base form. If a bidder proposes one, the fee should come down.
- Washington State's GC/CM convention puts bonds and insurance inside the fee. A 4 percent Washington fee and a 4 percent AIA fee are not the same number.
- Across every published public agency schedule, self performed change work carries roughly two to three and a half times the markup of pass through subcontract work. A single blended change order rate overpays on subcontracted changes.
- Bond premium is a declining marginal rate. A flat 1.5 percent bond line on a $25M job is over carried.
- Subcontractor default insurance costs the carrier about 0.35 percent and is priced to owners at bond equivalent 1 to 1.25 percent. The 0.65 to 0.90 point spread stays with the contractor.
- Only 6 percent of contractors estimate general conditions as a percentage of direct cost. Ninety four percent build it up in detail. If your bidder handed you a percentage, ask what it is built from.
What This Covers
- The five terms owners get wrong, defined precisely
- What a general contractor actually keeps
- Why general conditions is a burn rate, not a percentage
- What is actually inside the line, itemized
- Bonds, insurance, and the SDI spread
- Normalizing two bids that are not comparable
- Ten red flags, ranked
- Change order markup, and what public agencies actually cap it at
- The ten item bid form
- Frequently asked questions
The Five Terms Owners Get Wrong
The core error is this. "General Conditions" in AIA usage is a contract document, not a cost category. AIA A201-2017 is titled General Conditions of the Contract for Construction, and it contains the legal terms governing the parties. What you call general conditions on a bid form is the priced content of CSI MasterFormat Division 01, plus jobsite indirect labor. The two words are not interchangeable.
| Term | What it is | Where it lives | Who bears it |
|---|---|---|---|
| Cost of the Work | Direct trade work plus jobsite indirects necessarily incurred | AIA A102-2017 Article 7, an exclusive enumerated list | Owner reimburses |
| General Requirements | The specified, spec driven jobsite items | CSI MasterFormat Division 01 | Owner reimburses, inside Cost of the Work |
| General Conditions, cost sense | Jobsite indirect staffing and facilities. The time and presence costs | A102 §7.2.2 for supervisory and administrative personnel stationed at the site, §7.5 for temporary facilities | Owner reimburses |
| Home office overhead and G&A | Principal office salaries, estimating, accounting, marketing, IT, rent, executive comp | A102 Article 8, Costs Not To Be Reimbursed | Contractor, recovered inside the Fee |
| Fee | Home office overhead recovery plus profit | A102 §5.1.1, as a lump sum or a percentage of Cost of the Work | Owner pays as a separate line |
Article 7 of A102 is a closed list. The language is explicit: the Cost of the Work "shall include only the items set forth in this Article 7." Anything not enumerated is not reimbursable. And Article 8 names what is excluded, including salaries of personnel at the principal office, expenses of any office other than the site office, capital expenses including interest on capital employed, and insurance deductibles and self insured retentions.
That last exclusion matters. If your contractor's general liability policy carries a $250,000 self insured retention, A102 says the contractor eats it, not you. A GC modified A102 that quietly deletes that exclusion has transferred a quarter million dollars of risk without changing a single number on the bid form.
Fee Versus GMP Savings Split
These get conflated constantly. Fee is compensation earned regardless of outcome. A GMP savings split is the disposition of the delta if Cost of the Work plus Fee comes in under the GMP at final payment.
Here is the part most owners do not know: the AIA A102-2017 base form contains no savings share at all. Section 5.2.1 makes the GMP a one way ceiling. Costs that would exceed the GMP are paid by the contractor without reimbursement. Savings default entirely to the owner. Any split is a negotiated modification.
The ConsensusDocs 500 Guidebook publishes a worked tiered example: 80/20 owner to CM on the first $10M of savings, 70/30 on the second, 60/40 on the third, and 96/4 above $30M. The important part of that example is not the percentages. It is the carve out: no CM participation in allowance savings or in savings from scope decreases. Without that carve out, the contractor profits from an allowance you deliberately over set.
Worth knowing before you spend negotiating capital on this: NCHRP Synthesis 402, as summarized by LA Metro, found that shared savings clauses on CM/GC projects produced actual savings of less than one percent. Savings splits are mostly a governance signal, not a money mechanism.
What A General Contractor Actually Keeps
This is the only survey grade number in the entire subject, and it should recalibrate how you read a fee.
| CFMA 2025 Benchmarker, FY2024 data, n=1,558 | All companies | Best in class, top 25% |
|---|---|---|
| Net income before taxes | 6.7% | 12.0% |
| EBIT margin | 7.1% | 12.3% |
| EBITDA margin | 8.8% | 13.2% |
| Gross profit per full time employee | $83,554 | $121,138 |
| By segment, FY2024 | Net income before taxes | SG&A as % of revenue |
|---|---|---|
| Industrial and Nonresidential, the commercial GC segment | 4.4% | 7.3% |
| Heavy Construction | 8.3% | |
| Specialty Trades | 7.7% | Gross profit 22.4% |
The Derived Number That Matters
For the Industrial and Nonresidential segment, SG&A of 7.3 percent plus net income before taxes of 4.4 percent is roughly 11.7 percent of revenue that fee plus home office recovery has to cover. Only 4.4 points of that is profit. A general contractor quoting a 3.5 percent fee is not making 3.5 percent profit. They are making 3.5 percent minus whatever share of a 7.3 percent home office load this job has to absorb, which is why fee alone never tells you if a bid is real, and why an unusually low fee is a signal to look harder at the general conditions line, not a reason to relax.
General Conditions Is A Burn Rate, Not A Percentage
Here is the mechanism, and once you internalize it, most bid comparison problems solve themselves.
General conditions is duration driven and crew count driven, not value driven. A $4M job and a $12M job on the same ten month schedule with one superintendent carry nearly the same general conditions dollars. So the percentage falls as value rises, not because the contractor is being generous at scale, but because the numerator barely moved.
This is not a theory. A peer reviewed ARCOM study of 49 contractors found that 94 percent estimate general conditions by detailed build up from the contract conditions, and only 6 percent use a percentage of direct cost. Nobody who actually prices this work prices it as a percentage.
| Project size | Typical staffing | Modeled GC burn per month | Typical duration | GC total | GC as % of cost |
|---|---|---|---|---|---|
| $2M | 1 superintendent, PM at 25% | $22k to $30k | 7 months | $155k to $210k | ~8 to 10% |
| $5M | 1 superintendent, PM at 50% | $32k to $45k | 10 months | $320k to $450k | ~6.5 to 9% |
| $12M | 1 superintendent, PM, PE at 50% | $48k to $65k | 14 months | $670k to $910k | ~5.5 to 7.5% |
| $25M | 2 superintendents, PM, PE, PX at 10% | $75k to $100k | 18 months | $1.35M to $1.8M | ~5.5 to 7% |
The Corollary Owners Miss
If general conditions runs $55,000 per month and the schedule slips two months, the exposure is $110,000 before a single hour of trade labor is touched. On a schedule extension the trade work is already priced and largely complete. The only thing still burning is the monthly GC line plus escalation. That is why extension claims arrive as "X months times $Y per month general conditions," and why the bid form must fix $Y and state the duration basis or you are negotiating against a number you never agreed to.
Structure The Line Correctly
Three Kinds Of General Conditions Dollar
GC total equals mobilization, plus monthly burn times duration, plus demobilization. Each behaves differently on a schedule extension.
One Time
Schedule independent
Trailer delivery and setup at $1,000 to $5,000. Trailer removal, billed separately. Temp power service installation. Fence install and removal. Mobilization and demobilization. Final clean. As builts and closeout. Does not repeat on an extension.
Monthly
Schedule driven
All staffing. Trailer rent $250 to $900 per month. Sanitary $125 to $275 per unit per month. Dumpsters around $500 to $550 per week. Temp utility consumption. Fence rent. Security. Small tools. Jobsite vehicles. This is the entire extension claim.
Quantity Driven
Neither
Dumpster tonnage overage at $40 to $100 per ton. Punch list labor. Protection materials. Scales with work, not with time.
AIA A201-2017 §7.3.4 makes supervision and field office costs directly attributable to a change a compensable cost of that change. That is the contractual hook, and it is why the monthly rate needs to be a stated number.
What Is Actually Inside The Line
Staffing, Typically 55 To 70 Percent Of It
| Role | 2026 base salary range | Modeled fully burdened monthly |
|---|---|---|
| Superintendent, junior, 3 to 7 years | $75,000 to $95,000 | |
| Superintendent, experienced, 7 to 15 years | $95,000 to $125,000 | $12,000 to $16,000 |
| Superintendent, senior, 15+ years | $125,000 to $145,000 | |
| Project Manager, entry, 2 to 5 years | $85,000 to $105,000 | |
| Project Manager, mid, 5 to 10 years, fully allocated | $105,000 to $135,000 | $13,000 to $17,000 |
| Project Manager at 50% allocation, typical $3M to $8M job | $6,500 to $8,500 | |
| Project Manager, senior, 10+ years | $135,000 to $165,000 | |
| Project Engineer or APM | $8,000 to $10,500 | |
| Project Executive at 5 to 10% allocation | $1,500 to $3,000 | |
| Safety manager shared across 3 to 5 jobs | $2,500 to $4,500 | |
| Project accountant, part time | $1,500 to $3,000 | |
| Estimator, project level, 4 to 8 years | $80,000 to $100,000 | Usually home office, inside the fee |
Site Facilities, With Real 2026 Pricing
| Item | 2026 cost |
|---|---|
| Office trailer, 8x20, 160 sf | $150 to $400 per month |
| Office trailer, 10x40 or 12x40, 400 to 480 sf | $250 to $700 per month |
| Office trailer, 12x60, 720 sf | $450 to $900 per month |
| Double wide, 24x60 and up | $700 to $1,800 per month |
| Trailer delivery and setup, transport, blocking, leveling, anchoring, steps, skirting, site prep, utility hookups | $1,000 to $5,000 one time, plus a few hundred in permits |
| Portable toilet, standard with weekly service | $125 to $275 per unit per month |
| ADA compliant unit | $200 to $275 per week |
| OSHA handwash station | Add $50 to $100 per month |
| Roll off, 30 yard | About $500 per week, 3 to 5 ton allowance |
| Roll off, 40 yard | About $550 per week, 5 to 6 ton allowance |
| Tonnage overage | $40 to $100 per ton, commonly around $65 |
The Items That Resist National Pricing
These belong on the bid form as separate lines, but do not accept a national benchmark for any of them. Get a local quote.
- Temporary power. Utility connection fee is often the largest single component and is entirely local.
- Temporary heat and enclosure. The single most volatile general conditions item, and the one most likely to blow up on a schedule extension into a heating season.
- Hoisting. Mast climber, buck hoist, tower crane. On a mid rise this can exceed all other general conditions items combined. It belongs on its own line, not buried in GC.
- Scaffolding. Often trade carried. Verify it is not in both the GC line and the masonry or drywall subcontracts.
- Testing and inspection. A102 §7.6 makes lab fees reimbursable, but special inspections under IBC Chapter 17 are usually the owner's direct contract. If a bid carries a testing allowance, confirm it is not duplicating your own testing agency.
- Punch list labor. The item most often under carried. It is the tail of the entire GC burn.
- Small tools and consumables. Note that Iowa DOT explicitly bundles small tools into its 35 percent force account overhead. That is the published precedent for treating small tools as overhead rather than a reimbursable.
Bonds, Insurance, And The SDI Spread
The 2026 Rate Environment
| Line | 2026 rate movement | Note |
|---|---|---|
| General liability | Flat to +10% | Higher hazard construction and New York exposure face double digits |
| Workers compensation | Flat to +3% | Most stable line. Florida filed minus 6.9%, Iowa minus 2.5% |
| Commercial auto | +7% to +20% | Still the hardest line in the market |
| Excess and umbrella | +5% to +30% | Lead $1M to $2M layers still firm |
| Builders risk | Minus 5% to +10% | Ground up non catastrophe favorable. Frame construction remains challenging |
| Commercial property | Minus 5% to minus 20% | Best in class down to minus 50% |
Bonds Are A Declining Marginal Rate
| Contract tier | Illustrative standard rate |
|---|---|
| First $100,000 | $25 per $1,000, or 2.5% |
| Next $400,000 | $15 per $1,000, or 1.5% |
| Next $2,000,000 | $10 per $1,000, or 1.0% |
The structural point: bond cost as a percentage of contract price falls as the project gets bigger. A $30M job's blended bond rate is materially below a $2M job's. Any bid carrying a flat 1.5 percent bond line on a $25M project is over carrying. On federal work, FAR 52.228-15 sets performance and payment bond penal sums at 100 percent of the original contract price each, with increases in contract price generally requiring bond increases equal to 100 percent of the increase.
Subcontractor Default Insurance Versus Subcontractor Bonds
| Attribute | SDI | Subcontractor payment and performance bonds |
|---|---|---|
| Carrier premium | About $3.50 per $1,000, or 0.35% of enrolled subcontract value | 1% to 1.25% typical |
| Price to the owner | Typically priced at or slightly less than subcontractor surety bonds, so 1% to 1.25% | 1% to 1.25% |
| The spread | About 0.65 to 0.90 points stays with the contractor | Not applicable |
| Deductible | $350,000 to $2,000,000 per loss occurrence | None to the owner |
| Co-pay layer | $1M to $5M and up, contractor pays 20% within the band | Not applicable |
| Who controls the claim | The contractor. It is a first party policy | The owner has direct rights against the surety |
| Eligibility | Typically above $75M annual subcontract volume plus financial strength | Any contractor |
The owner's takeaway: SDI usually costs you the same as bonds, but the contractor captures a 0.65 to 0.90 point margin and controls the default remedy, and you lose a direct claim right against a surety. It is not free and it is not neutral. Ask for the SDI line at its actual charged rate, and ask what the deductible and co-pay are. If the contractor's per loss retention is $700,000, you are relying on their balance sheet rather than an insurer's.
Normalizing Two Bids That Are Not Comparable
Comparing line to line is meaningless when the two bidders structured the price differently. Do this instead.
01
Compute Total Contractor Take
For each bidder, add general conditions, fee, bonds, insurance, any insurance and taxes fee, the precon fee, and any SDI spread. Divide that by the trade cost, meaning Cost of the Work excluding all of the above. Do not divide by the total. Dividing by the total mathematically rewards the bidder with the bigger number.
02
Normalize the schedule
Ask both bidders for general conditions as dollars per month times months. If Bidder A shows 12 months and Bidder B shows 15, A's lower GC total is a schedule claim, not a savings. Re-price both at the longer duration and see who is actually cheaper. Washington's RCW 39.10.370 requires the general conditions work to be a fixed amount for detailed specified general conditions work, separate from the construction cost and separate from the percent fee. That structure only works if the duration basis is stated.
03
Normalize the risk transfer
A fee is not comparable across bids with different contingency ownership. Ask whose contingency it is, who keeps the unspent balance, and whether the fee applies to it. Both answers exist in public practice. Virginia DGS requires all remaining CM contingency to be retained by the owner. Ohio OFCC deliberately sets the CM fee as a percentage of Cost of Work plus Contingency. So fee on contingency is not automatically improper. It is a pricing convention that must be disclosed and normalized.
04
Normalize the savings split
AIA A102's default gives you 100 percent of savings. If a bidder proposes a split, the fee comes down. And copy the ConsensusDocs carve out: no participation in allowance savings or in savings from scope decreases.
Ten Red Flags, Ranked
- General conditions as a single lump sum with no schedule basis and no itemization. The counter standard is public and specific. The University of Houston System requires general conditions as a not to exceed with an itemized breakdown on an exhibit. Washington requires detailed specified general conditions work. Ohio OFCC requires named personnel with hourly rates and hour caps. If a public owner can demand it, so can you.
- Fee applied at a different rate to change orders than to base work. A102 §5.1.2 leaves the method of fee adjustment for changes blank. If you do not fill it in, §6.4 falls back to equitably adjusted on the same basis used to establish the original fee. Fill in the blank.
- Fee on contingency, undisclosed. Not improper in itself. Improper only when hidden. Force the bid form to state whether the fee base is Cost of Work or Cost of Work plus Contingency.
- Allowances hiding scope gaps. Every allowance should name the Division 01 21 00 section, state what is included, state the unit basis, and state that unexpended balance reverts to the owner. An allowance with no unit basis is a scope gap with a number on it.
- Cumulative markup on tiered subcontractors. GSAM 552.243-71(h)(7) allows no overhead or profit on the direct costs of a subcontractor more than two tiers below the firm. Hawaii caps it at not more than three line item percentages regardless of the number of tiers. Adopt one of these.
- Bonds carried at a flat percentage on a large job, ignoring the declining marginal scale.
- Insurance carried with the deductible or SIR silently reimbursable. A102 Article 8 excludes it. A modified A102 that deletes that exclusion is transferring real money.
- Precon fee inside the GMP when the form is ConsensusDocs 500, where preconstruction is expressly not included in the GMP. That is double payment.
- Schedule of values used as a line item guarantee argument. A102 §12.1.5.2 says allocation in the schedule of values does not create separate guaranteed maximum prices for individual line items. Do not let a contractor argue the GC line is separately guaranteed when it suits them and fungible when it does not.
- No named superintendent, or a superintendent shown at less than 100 percent. General conditions dollars follow people. An unnamed superintendent is an unpriced line.
Change Order Markup: What Public Agencies Actually Cap
The "ten and ten" convention is not a rule. Forensic claims consultants at J.S. Held put it plainly: there is no custom and practice in the insurance industry regarding when overhead and profit is applied, or in what percentages, and it must be objectively determined based on project size, duration, and market conditions.
What does exist is a set of published public agency schedules, and they all point the same direction.
| Jurisdiction | Contractor's own work | Subcontracted work | Tier limit |
|---|---|---|---|
| Iowa DOT §1109, revised April 2026 | 35% of labor, covering small tools and all other overhead. Materials +15%. Insurance and taxes +10% | 10% on the first $50,000, $100 minimum, then 5% above $50,000 | Declining scale |
| Caltrans, per Local Assistance Module 8, January 2026 | Labor 35%, equipment rental 15%, materials 15% | 10% administrative markup to the prime | |
| GSAM 552.243-71, federal | Profit shall not exceed 10%. Overhead negotiated | Within two tiers, OH and profit at only 50% of negotiated rates, combined not over 10% | No markup more than two tiers below. Bond and insurance markups applied after all OH and profit |
| Hawaii HAR §3-125-13 | 20% for own forces | 20% for each subcontractor on work it performs directly, 10% on the amount due when passed down a tier | Not more than three line item percentages regardless of the number of tiers |
The Pattern To Take Away
Self performed change work carries roughly two to three and a half times the markup of pass through subcontract work. Hawaii is 20 versus 10. Caltrans is 35 versus 10. Iowa is 35 versus 10 declining to 5. The logic is sound: on self performed work the contractor is supplying labor, supervision, small tools, and risk. On subcontracted work they are administering a contract. A single blended change order markup rate overpays on subcontracted changes, and that is where most change order dollars actually go.
Two ideas worth borrowing into a private contract. First, GSAM's tier discipline: 50 percent of rates within two tiers, nothing beyond two tiers, capped at 10 percent combined, and bonds and insurance applied last. That is the cleanest clause an owner can copy. Second, Iowa's declining scale: 10 percent on the first $50,000 and 5 percent above it. It is the published precedent for tiering markup down on large change orders, directly analogous to fee compression on base contract size.
And one AIA provision owners forget to invoke: A201 §7.3.10. On mixed additions and credits, the allowance for overhead and profit is figured on the basis of net increase, if any. That is the anti double dip rule.
The Ten Item Bid Form
Modeled on four verified public agency forms. None of this is unusual to ask for. All of it is already required somewhere in public procurement.
- Fee, as a percentage, with the fee base explicitly stated, and the method of fee adjustment for changes filled in.
- Preconstruction fee, separate lump sum, stated as inside or outside the GMP.
- General conditions, as a fixed amount for a stated duration, with an itemized breakdown by Division 01 section, named personnel with title, percent allocation, and monthly burdened rate, an explicit dollar per month burn rate for extension pricing, and one time mobilization and demobilization separated from monthly burn.
- Contingency, as a percentage, with your approval right for each draw and the disposition of the unspent balance stated.
- Bonds, premium and the rate tiers used.
- Insurance and taxes, as a percentage of the Cost of the Construction Work, broken into general liability, excess, builders risk, and SDI, with deductibles and SIRs stated and confirmation that they are not reimbursable.
- Savings split, with the tier table, and allowance savings and scope decrease savings expressly excluded.
- Change order markup schedule, with the self perform rate, the subcontracted rate, the tier limit, and the net increase rule for mixed adds and credits.
- Self perform declaration: which scopes, at what fee, and whether they were competitively bid against outside subcontractors.
- Allowance schedule, with unit basis and reversion language.
One more benchmark worth having in your pocket. NCHRP Synthesis 402 found that preconstruction services averaged 0.80 percent of estimated construction cost on CM/GC projects reviewed. In the same body of work, UDOT recorded 40 percent savings on design contracts from constructor preconstruction input. Preconstruction is one of the few line items where the published data says the spend returns more than it costs, which is why we price preconstruction as a distinct deliverable rather than folding it into the fee.
Market Context For 2026
The AGC and Sage 2026 Construction Hiring and Business Outlook surveyed 951 respondents across 49 states in November and December 2025. Net positive segments include data centers at plus 57 percent, up from plus 42 the prior year, power at plus 34, non hospital healthcare at plus 24, hospitals at plus 20, manufacturing at plus 15, and warehouse at plus 5. Net negative: retail at minus 18 and private office at minus 14.
Two numbers from that survey change how you should read a bid. 82 percent of contractors report difficulty filling hourly craft positions and 80 percent report the same on salaried roles, with 46 percent having raised base pay 4 to 6 percent. And 63 percent had an owner postpone or cancel a project in the past six months. A contractor's general conditions staffing assumption in that labor market is a real risk assumption, not a formality.
See The Line Items Before You Sign
Terrapin Construction Group is a design build commercial general contractor working nationwide in the $1M to $30M range, licensed in all 50 states. We price general conditions as a stated monthly burn against a stated duration, with named personnel and allocations, because that is the only version of the number an owner can actually evaluate.
Schedule A 30 Minute Call Get Your Bids ReviewedFrequently Asked Questions
What percentage should general conditions be?
There is no published survey that answers this by project size, and any table claiming to is usually synthesized rather than sourced. The honest answer is that general conditions is a monthly rate times a duration, so the percentage falls as contract value rises. Modeled from verified 2026 salary and site cost inputs, a $2M job with one superintendent over seven months lands around 8 to 10 percent, a $12M job with a superintendent, project manager, and half a project engineer over fourteen months lands around 5.5 to 7.5 percent, and a $25M job lands around 5.5 to 7 percent. Complex asset classes such as healthcare, laboratory, and occupied renovation push those numbers up because they extend duration and add supervision without adding contract value.
What is a fair GC fee?
Fee alone does not answer the question. CFMA's 2025 Benchmarker puts the Industrial and Nonresidential segment at 4.4 percent net income before taxes with 7.3 percent SG&A, so roughly 11.7 percent of revenue is what fee plus home office recovery has to cover, and only 4.4 points of that is profit. A contractor quoting 3.5 percent fee is not making 3.5 percent profit. The right question is total contractor take, meaning general conditions plus fee plus bonds plus insurance plus precon, divided by trade cost rather than by the project total.
What is the difference between general conditions and general requirements?
General Conditions in AIA usage is a contract document, specifically A201-2017, containing the legal terms governing the parties. General Requirements is CSI MasterFormat Division 01, the specified jobsite items. What most bid forms call general conditions is actually Division 01 general requirements plus jobsite indirect staffing, which under AIA A102 sits in Cost of the Work at sections 7.2.2 and 7.5. A line item that cannot be traced to a Division 01 section or to those two AIA sections is either home office overhead in disguise or double counted trade scope.
Does the owner or the contractor keep GMP savings?
Under AIA A102-2017 as written, the owner keeps 100 percent. The base form contains no savings share, and section 5.2.1 makes the GMP a one way ceiling: costs that would exceed it are paid by the contractor without reimbursement. Any split is a negotiated modification. If a bidder proposes one, the fee should come down, and you should copy the ConsensusDocs carve out excluding allowance savings and scope decrease savings from the contractor's share. Be aware that published research found shared savings clauses producing actual savings of less than one percent, so this is more of a governance signal than a money mechanism.
What is a fair change order markup?
There is no single fair number, and the ten and ten convention has no standing. What the published public agency schedules show consistently is that self performed change work carries roughly two to three and a half times the markup of pass through subcontract work. Hawaii sets 20 percent for own forces and 10 percent passed down a tier. Caltrans sets 35 percent on labor and 10 percent on subcontracted work. Iowa DOT sets 35 percent on labor and 10 percent on the first $50,000 of subcontracted work declining to 5 percent above that. Federal GSAM caps profit at 10 percent, halves the rates within two tiers, and allows nothing beyond two tiers.
Why do schedule extension claims always hit general conditions?
Because on an extension the trade work is already priced and largely complete. The only thing still burning is the monthly general conditions line plus escalation. If general conditions runs $55,000 a month, a two month slip is $110,000 before a single hour of trade labor is touched. AIA A201 section 7.3.4 makes supervision and field office costs directly attributable to a change compensable, so the exposure is contractual, not theoretical. The defense is to fix the monthly rate and state the duration basis on the bid form, so you are not negotiating against a number you never agreed to.
Should I require bonds or accept subcontractor default insurance?
Understand what you are buying. SDI costs the carrier about $3.50 per $1,000 of enrolled subcontract value, or 0.35 percent, and is typically priced to owners at bond equivalent levels of 1 to 1.25 percent. The 0.65 to 0.90 point spread stays with the contractor for administration and claims management. More importantly, SDI is a first party policy, so the contractor controls the default remedy and you lose a direct claim right against a surety. Deductibles run $350,000 to $2,000,000 per loss with a 20 percent co-pay band above that. Ask for the actual charged rate, the deductible, and the co-pay, and understand that you are relying on the contractor's balance sheet within that retention.
Is it wrong for the contractor to charge fee on contingency?
Not automatically. Ohio's Office of Facilities Construction and Commissioning explicitly sets the CM fee as a percentage of Cost of Work plus Contingency, which is a public owner deliberately allowing it. Virginia DGS goes the other way and requires all remaining CM contingency to be retained by the owner. So it is a pricing convention rather than a violation. What is improper is leaving it undisclosed. Force the bid form to state whether the fee base is Cost of Work or Cost of Work plus Contingency, and normalize both bids to the same basis before comparing.
How do I compare a lump sum bid to a GMP bid?
On a lump sum, the fee is invisible, buried in the number, and you have no right to see the split unless the bid form demands it. On a GMP under AIA A102, the fee is stated at section 5.1.1 and general conditions are reimbursed inside Cost of the Work. To compare them, ask both bidders for the same disclosure: fee, general conditions as dollars per month times months, bonds, insurance with deductibles stated, precon, and contingency ownership. Then compute total contractor take divided by trade cost. If one bidder refuses to disclose, that refusal is itself information.
What is the single most useful thing I can add to my bid form?
Require general conditions as a fixed amount for a stated duration, itemized by Division 01 section, with named personnel showing title, percent allocation, and monthly burdened rate, plus an explicit dollar per month burn rate that will govern any extension pricing. That one requirement resolves the schedule normalization problem, the extension claim problem, and the unnamed superintendent problem at the same time. Every element of it is already required by at least one public agency in the United States, so no reputable contractor can call it unreasonable.
Sources And Further Reading
- AIA A102-2017 sample, Cost of the Work Plus a Fee with a Guaranteed Maximum Price
- AIA A201-2017, General Conditions of the Contract for Construction, preview
- ConsensusDocs 500, Owner and Construction Manager Agreement
- ConsensusDocs 500 Guidebook, including the tiered savings split example
- CSI MasterFormat, the Division 01 framework
- CFMA Construction Financial Benchmarker
- CFMA 2025 Benchmarker executive summary
- RSMeans data by Gordian, unit costs and location factors
- AGC and Sage 2026 Construction Hiring and Business Outlook
- DBIA research on design build market share
- Chan and Pasquire, ARCOM, estimating project overheads
- LA Metro summary of NCHRP Synthesis 402, CM/GC best practices
- RCW 39.10.370, Washington GC/CM contract cost structure
- Washington DES GC/CM Best Practices Manual, April 2025
- Ohio Administrative Code 153:1-6-01, CM at risk pricing components
- Virginia DGS CO-7CM, the three bucket CM pricing structure
- University of Houston System design build GMP agreement
- Iowa DOT Standard Specifications Section 1109, force account markup
- Caltrans Local Assistance Module 8, Payment, January 2026
- GSAM 552.243-71, Equitable Adjustments
- Hawaii Administrative Rules 3-125-13, change order markup
- FAR 52.228-15, Performance and Payment Bonds
- NASBP, Subcontractor Default Insurance
- J.S. Held, General Conditions, Overhead and Markup
Terrapin Construction Group is a nationwide design build commercial general contractor headquartered in Denver, Colorado, licensed in all 50 states, and a Procore Certified Contractor. We work in the $1M to $30M project range across cold storage, food processing, industrial, healthcare, hospitality, and data center adjacent work.
Benchmark figures are current as of August 2026 and are cited to their published sources. Tables marked as modeled are Terrapin Construction Group's own illustrations built from verified inputs, not survey data, and should be treated as a way of seeing the mechanism rather than as a benchmark to hold a bidder to. Nothing in this article is legal advice. Contract language should be reviewed by your own counsel before execution.
