Construction glossary
Construction terms defined in a sentence or two, each with a worked example and how it differs from the term next to it.
Definition
Hard Costs vs Soft Costs: What Is the Difference?
Hard costs pay for building the project; soft costs pay for everything else, from design fees to loan interest. Definitions and a worked owner's budget.
· 3 min read
Definition
Lump Sum vs Cost-Plus: What Is the Difference?
A lump-sum contract fixes the price; a cost-plus contract pays actual cost plus a fee. Definitions, a worked comparison, and where a GMP fits.
· 3 min read
Definition
What Are As-Built Drawings?
As-built drawings are the contract drawings marked up to show what was actually built. Definition, how they differ from record drawings, and an example.
· 3 min read
Definition
What Are Liquidated Damages in Construction?
Liquidated damages are a daily amount, fixed in the contract, that a contractor pays for finishing late. Definition, a worked example, LDs vs. penalties.
· 3 min read
Definition
What Are Means and Methods in Construction?
Means and methods are how the contractor builds the work: equipment, crews, sequence and safety. Definition, who is responsible, and an example.
· 3 min read
Definition
What Are Performance and Payment Bonds?
A performance bond guarantees the work gets finished; a payment bond, that subs and suppliers get paid. Definitions, the Miller Act rule, an example.
· 3 min read
Definition
What Are Stored Materials on a Pay App?
Stored materials are delivered but not yet installed, billed in their own pay app column. Definition, the rules for on-site and off-site, and an example.
· 4 min read
Definition
What Are the Contract Documents in Construction?
The contract documents are the agreement, conditions, drawings, specifications, addenda and modifications that together make up a construction contract.
· 3 min read
Definition
What Does Additional Insured Mean?
An additional insured is a company added to someone else's liability policy by endorsement. What it means on a job, and why a certificate isn't enough.
· 3 min read
Definition
What Is a Back-Charge in Construction?
A back-charge is a deduction from a sub's payment for costs the GC incurred because of the sub's work. Definition, a worked example, and how it differs.
· 3 min read
Definition
What Is a Bid Alternate?
A bid alternate is a separately priced add or deduct option the owner may accept. Definition, a worked example, and alternate vs. allowance.
· 3 min read
Definition
What Is a Bid Bond?
A bid bond guarantees a bidder will sign the contract and furnish bonds if it wins. Definition, a federal example, and bid bond vs. performance bond.
· 3 min read
Definition
What Is a Bid Form in Construction?
A bid form is the document a bidder fills in and signs to submit its price. What it holds, a filled-in example, and how it differs from a proposal.
· 3 min read
Definition
What Is a Bid Package in Construction?
A bid package is the scope and documents sent out for one price, usually one trade's work. What goes in it, an example, and bid package vs. bid set.
· 3 min read
Definition
What Is a Certificate of Insurance (COI)?
A certificate of insurance summarizes the policies a contractor carries on the day it is issued. What it shows, an example, and why it isn't the policy.
· 3 min read
Definition
What Is a Certificate of Occupancy?
A certificate of occupancy is the building department's approval to occupy a building. Definition, temporary COs, and how it differs from completion.
· 3 min read
Definition
What Is a Change Order in Construction?
A change order is a signed amendment to a construction contract that changes the work and adjusts price, time or both. Definition and a worked example.
· 3 min read
Definition
What Is a Change Order Request?
A change order request is a contractor's priced proposal for a change, sent before a change order exists. Definition, an example, and the notice clock.
· 4 min read
Definition
What Is a Committed Cost in Construction?
Committed cost is the value of signed subcontracts and POs on a job, billed or not. Definition, a budget example, and how it differs from actual cost.
· 3 min read
Definition
What Is a Cost Code in Construction?
A cost code is the number that tags every budget line, contract, invoice and change order to the same category of work. Definition and an example.
· 3 min read
Definition
What Is a Daily Log in Construction?
A daily log is the superintendent's same-day record of a job site: weather, crews, work, deliveries, delays. Definition, an example, and why it matters.
· 3 min read
Definition
What Is a Letter of Intent in Construction?
A letter of intent says the work will be awarded before the contract is signed, sometimes authorizing limited work. Definition and an example.
· 3 min read
Definition
What Is a Long-Lead Item in Construction?
A long-lead item takes so long to approve, build and ship that it must be ordered early. Definition, the order-by math, and an example.
· 3 min read
Definition
What Is a Look-Ahead Schedule?
A look-ahead schedule breaks the next few weeks of the master schedule into the work each crew will do. Definition, an example, and how it differs.
· 3 min read
Definition
What Is a Notice to Proceed?
A notice to proceed is the owner's written go-ahead to start work, and often starts the contract time. Definition, a worked date example, NTP vs. award.
· 3 min read
Definition
What Is a Preliminary Notice?
A preliminary notice tells the owner and GC early that a sub or supplier is on the job and may claim a lien. Definition, two state rules, an example.
· 4 min read
Definition
What Is a Purchase Order in Construction?
A construction purchase order buys materials or equipment at stated prices, quantities and delivery terms. Definition, an example, PO vs. subcontract.
· 3 min read
Definition
What Is a Scope of Work in Construction?
A scope of work says what a contractor will and won't do, and which documents it rests on. Definition, an example, and scope vs. specifications.
· 3 min read
Definition
What Is a Shop Drawing?
A shop drawing shows exactly how a trade will fabricate and install part of the work, submitted for review before fabrication. Definition and an example.
· 4 min read
Definition
What Is a Subcontract?
A subcontract is the GC's contract with a sub for part of the prime contract's work. What it holds, and how it differs from a purchase order.
· 3 min read
Definition
What Is a Substitution Request?
A substitution request asks to use a product other than the one specified, with proof it is equal. Definition, an example, and or-equal vs. substitution.
· 3 min read
Definition
What Is a Takeoff in Construction?
A takeoff counts and measures every item of work on the drawings, the base of a bid. Definition, a worked drywall example, and takeoff vs. estimate.
· 3 min read
Definition
What Is a Unit Price in Construction?
A unit price is a fixed price per unit of measured work, paid on the quantity installed. Definition, a worked example, and the 15% quantity rule.
· 3 min read
Definition
What Is an Addendum in Construction?
An addendum is a written change to the bid documents issued before bids are due. Definition, an example, and how it differs from an ASI and a change order.
· 3 min read
Definition
What Is an Invitation to Bid in Construction?
An invitation to bid asks contractors to price defined work by a deadline. What it contains, an example, and how it differs from an RFP and an RFQ.
· 4 min read
Definition
What Is an O&M Manual?
An O&M manual tells the owner how to operate, maintain and repair a building's equipment and systems. Definition, what goes in one, and an example.
· 3 min read
Definition
What Is an OAC Meeting?
An OAC meeting is the regular owner-architect-contractor meeting during construction. What it covers, an example minutes item, and how it differs.
· 3 min read
Definition
What Is an RFI in Construction?
An RFI is a contractor's written question to the design team when the drawings or specs are unclear. Definition, an example, and what an RFI is not.
· 3 min read
Definition
What Is Cost to Complete?
Cost to complete is what is still to be spent to finish a job or budget line. Definition, the formula with projected final cost, and a worked example.
· 3 min read
Definition
What Is CSI MasterFormat?
CSI MasterFormat is the standard numbering for construction specifications, reused for bid packages, cost codes and closeout. Definition and an example.
· 3 min read
Definition
What Is Mobilization in Construction?
Mobilization is the work and cost of setting up on site before production starts, often paid as a lump-sum line. Definition, an example, demobilization.
· 3 min read
Definition
What Is Overhead and Profit (OH&P)?
Overhead and profit is the markup a contractor adds to direct cost. Definition, a worked example, and how OH&P differs from general conditions.
· 2 min read
Definition
What Is Subcontractor Prequalification?
Prequalification is a GC's review of a sub before inviting it to bid: finances, safety, experience, capacity. Definition, an example, and vs. onboarding.
· 3 min read
Definition
What Is the Warranty Period in Construction?
The warranty period is how long the contractor must fix defective work after completion. Definition, start dates, repaired work, and a worked example.
· 3 min read
Definition
What Is Time and Materials (T&M) in Construction?
Time and materials pays actual hours at agreed rates plus materials and equipment at cost plus markup. Definition, a priced ticket, and when it is used.
· 3 min read
Definition
What Is Value Engineering in Construction?
Value engineering delivers the same function for less without cutting what the owner needs. Definition, a federal savings-sharing example, VE vs. cuts.
· 3 min read
Definition
Conditional vs Unconditional Lien Waiver
A conditional lien waiver takes effect only when payment clears; an unconditional one takes effect when signed. The difference, side by side, from statute.
· 3 min read
Definition
What Are General Conditions in a Construction Bid?
General conditions in a bid are the contractor's cost of running the job: supervision, temporary facilities, site services. Not the A201 contract document.
· 4 min read
Definition
What Is Retainage in Construction?
Retainage is a percentage of each construction progress payment held back until the work is complete. Definition, an example, and how it differs.
· 3 min read
Definition
Bid Tabulation vs Bid Leveling: What's the Difference?
A bid tabulation records each bid as received; bid leveling adjusts each bid for scope gaps so all cover the same work. How they differ, with an example.
· 4 min read
Definition
ASI vs RFI: What Is the Difference?
ASI vs RFI: an RFI is the contractor's question about the documents; an ASI is the architect's written instruction or minor change, with no cost or time.
· 4 min read
Definition
What Is Substantial Completion?
Substantial completion is when the work is complete enough for the owner to use it as intended. What it triggers: retainage, warranties, delay damages.
· 3 min read
Definition
What Is a Punch List in Construction?
A punch list is the list of work still to be completed or corrected once a building is substantially complete. What goes on it, who writes it, an example.
· 3 min read
Definition
What Is Float in a Construction Schedule?
Float is how many working days an activity can slip. Total float vs free float, worked on a five-activity network, and who owns the float.
· 4 min read
Definition
Design-Bid-Build vs Design-Build vs CM at Risk
Design-bid-build, design-build and CM at risk compared for owners: who holds which contract, when the price is fixed, and when each one fits.
· 4 min read
Definition
What Is a Pay Application in Construction?
A pay application is a contractor's monthly request for payment against the schedule of values, less retainage and earlier payments. With an example.
· 3 min read
Definition
What Is a Transmittal in Construction?
A transmittal is the cover sheet that records what was sent, to whom, when and why, such as a submittal sent to the architect. The fields, with an example.
· 3 min read
Definition
What Is the Critical Path in Construction?
The critical path is the longest chain of linked activities in a construction schedule. A worked five-activity example, float, and what a delay does.
· 4 min read
Definition
Allowance vs Contingency: What Is the Difference?
An allowance is a set sum for a known item not yet chosen; a contingency is money for what nobody can foresee. How each is used and adjusted.
· 4 min read
Definition
What Is a GMP Contract in Construction?
A GMP contract caps what the owner pays: the cost of the work plus a fee, up to a ceiling. A worked example of shared savings and an overrun.
· 4 min read
Definition
What Is a Submittal in Construction?
A submittal is what the contractor sends the design team to show how it will meet the specs: shop drawings, product data, samples. Types and an example.
· 4 min read
Definition
Change Order vs Construction Change Directive
A change order is an agreed change in scope, price and time; a construction change directive orders the work before price or time is agreed.
· 4 min read
Definition
RFI vs Submittal: What Is the Difference?
An RFI asks the design team what the documents mean; a submittal shows how the contractor will meet them. The difference, side by side, with an example.
· 3 min read
Definition
What Is a Mechanic's Lien?
A mechanic's lien is a legal claim against a property by someone who improved it and was not paid. Who can file one, how it works, and what it is not.
· 3 min read
Definition
What Is a Plug Number in a Bid?
A plug number is an estimator's own figure for work with no firm price yet: a placeholder in the estimate, or an add to a bid that excluded scope.
· 4 min read
Definition
What Is a Schedule of Values?
A schedule of values splits a construction contract sum into line items that every pay application bills against. Definition, example and how it differs.
· 3 min read