The Georgian government has approved a new technical regulation for public construction procurement, defining allowable profit margins, overhead costs, and other budget components for infrastructure projects. The decree was published on June 1 and is already in force, following recent accelerated amendments to the Law on Public Procurement.
Under the new rules, the maximum planned profit margin for construction, installation, and specialized works is set at 8%. This margin will be applied to the sum of direct and overhead costs, excluding equipment and machinery expenses.
The regulation also introduces caps on overhead costs depending on the type of project. For standard construction works, overhead costs are set at 14.1% of direct expenses; for state-secret facilities at 15.1%; and for tunnels and certain metro-related works at 27.1%.
Different rules apply to specialized works. In such cases, overhead costs are calculated based on the wage fund—87% for electrical installation works and up to 99% for air traffic control system installations at airports.
The document also regulates unforeseen expenses, setting them between 3% and 10% depending on project complexity. The highest 10% ceiling applies to complex infrastructure such as hydropower plants, metro systems, tunnels, and large bridges. A 7% limit is set for metallurgical, chemical, and oil-processing facilities as well as reconstruction projects, while most public buildings and infrastructure projects are capped at 5%. Residential construction has a 3% limit.
Additional provisions cover temporary structures, logistics, supply, and winter construction conditions, with fixed percentage norms required in cost estimates.
The new regulation makes these limits mandatory for public tenders when calculating estimated project costs and replaces rules that had been in place since 2014.
