Construction Industry Terminology

ADA (Americans with Disabilities Act)

US civil rights law requiring accessibility in the built environment; compliance is measured against ADA Standards for Accessible Design and often enforced by the Authority Having Jurisdiction (AHJ).

Verify restroom layouts meet ADA clearances; Specify ramp slopes at 1:12 with compliant landings; Coordinate door hardware and signage mounting heights to ADA standards.

Addendum

A written change to the bidding/procurement documents issued before contract award to clarify, revise, or add information; becomes part of the contract documents once the contract is executed.

Issue Addendum 2 to change door hardware sets before bid; Update the finish schedule via addendum; Extend bid date in an addendum to allow plan review.

Allowance

A budget placeholder in the contract for a defined purpose but with an undefined scope or selection at award; reconciled by change order once actual cost is known.

Include a $50,000 landscaping allowance pending final design; Use an appliance allowance to maintain bid comparability; Reconcile unused allowances in the final pay app.

Alternates (Bid Alternates)

Optional scope items priced separately from the base bid so the owner can add or deduct features without re-bidding the project.

Base bid excludes the green roof; Alternate #1 adds TPO roofing; Accept deduct alternate to use LVT in lieu of tile.

As-Built Drawings

Record drawings that reflect actual installed conditions and deviations from the design; used for operations, maintenance, and future renovations.

Mark up the site plan with actual utility depths; Record field-routed conduit runs; Submit final as-builts at closeout.

Base Bid

The core scope and price a bidder proposes, excluding any alternates or unit rates; basis for award in competitive bids.

Provide pricing for the base bid only; Exclude alternates from the base bid; Compare base bids across all GCs for fairness.

Bid Bond

A surety instrument guaranteeing that a bidder will enter the contract at the bid price and furnish required performance and payment bonds if awarded.

Provide a 10% bid bond with the proposal; Disqualify bids lacking required bid bonds; Claim bid bond if the low bidder refuses to sign.

BIM (Building Information Modeling)

A digital representation of a facility’s physical and functional characteristics enabling 3D coordination, 4D scheduling, and 5D cost integration.

Clash-detect MEP with structure in the BIM model; Extract quantities from the 5D BIM for estimating; Use 4D BIM to sequence the steel erection.

Builder’s Risk Insurance

Property insurance covering buildings and materials during construction against causes of loss such as fire, theft, or weather events (policy-specific).

File a claim for storm damage to stored materials; Confirm builder’s risk covers off-site fabricated components; Align policy limits with GMP value.

Change Directive (CCD)

An owner-issued instruction requiring the contractor to proceed with a change prior to agreement on cost and/or time impact; interim authorization mechanism.

Issue a CCD to proceed with unforeseen rock removal; Track T&M tickets under the CCD; Convert CCD to a priced change order later.

Change Order (CO)

A formal modification to the contract that adjusts scope, price, and/or schedule; executed by the contracting parties.

Submit CO #14 for added floor drains; CO includes cost and 5-day time extension; Owner rejects CO pending backup.

Commissioning (Cx)

A quality-focused process that verifies building systems are planned, installed, and perform according to the owner’s project requirements and design intent.

Perform functional testing of AHUs; Verify TAB reports meet design criteria; Complete pre-functional checklists before startup.

Contingency

A budget reserve set aside for risk and uncertainty; can be owner’s (scope changes) or contractor’s (means/methods and estimating variance).

Use owner contingency to fund scope adds; Hold contractor contingency for buyout variances; Track contingency drawdowns monthly.

Critical Path Method (CPM)

A network-based scheduling technique where the longest path of dependent activities determines the project’s minimum duration; activities on the path have zero total float.

Identify the critical path through foundation and steel; Update the CPM schedule after weather delays; Analyze float consumption for risk.

CSI MasterFormat

A standardized system for organizing specifications and cost data into divisions and sections published by CSI, enabling consistent documentation.

Specify doors in Division 08; Place site utilities in Division 33; Organize submittals by CSI section.

Daily Report

A superintendent’s or foreman’s daily record of site conditions, manpower, work activities, deliveries, and issues; supports documentation and claims.

Log workforce headcount and weather daily; Attach delivery tickets to daily report; Record safety incidents and inspections.

Design-Bid-Build (DBB)

A traditional delivery method where design is completed before competitive bidding and construction; owner holds separate contracts with designer and builder.

Architect completes CDs, then the project is bid; Award to the lowest responsive bidder; Separate design and construction contracts.

Design-Build (DB)

A delivery method where a single entity is responsible for both design and construction, often enabling faster schedules and improved collaboration.

Award a single contract for design and construction; Fast-track early packages; Resolve RFIs within the DB team.

Differing Site Conditions

Physical site conditions materially different from those indicated or ordinarily expected; may entitle contractor to cost/time relief under contract.

Encounter unexpected contaminated soil; Discover uncharted utilities; Submit notice per contract within 7 days.

Earned Value Management (EVM)

A performance management method integrating scope, schedule, and cost to quantify progress and forecast outcomes (e.g., CPI, SPI, EAC).

Report CPI and SPI at month-end; Forecast EAC based on EV trends; Identify underperforming trades via EV variance.

Escalation (Cost Escalation)

Anticipated inflation in labor and material costs over time; addressed via allowances, indices, or contract clauses.

Add 6% annual escalation for steel in the estimate; Include escalation clause for long-lead equipment; Track market indices quarterly.

Geotechnical Report

A subsurface investigation report detailing soil/rock properties, groundwater, and foundation recommendations that inform design and construction means.

Design foundations per geotech bearing capacity; Include undercut and backfill per recommendations; Account for groundwater in dewatering plan.

General Conditions

Indirect job costs (site management, temporary utilities, safety, etc.) and/or the contract section defining parties’ rights and obligations.

Budget superintendent, temp power, and fencing in general conditions; Charge project signage to general conditions; Track jobsite overhead monthly.

Guaranteed Maximum Price (GMP)

A contract arrangement where the contractor guarantees the total price will not exceed a cap, subject to agreed changes; savings and contingencies are defined.

Establish the GMP at 60% CDs; Share savings below GMP per contract; Track allowances and contingencies within the GMP.

Hard Bid

A competitive, price-focused procurement where the lowest qualified bid wins; typically used with DBB projects.

Submit sealed bids by 2 p.m.; Award to lowest responsive and responsible bidder; No scope negotiation post-bid.

IBC (International Building Code)

A model building code adopted by jurisdictions that sets minimum standards for life safety, egress, structural, and fire protection requirements.

Confirm occupancy classification per IBC; Apply Type IIA construction requirements; Check IBC egress widths for corridors.

IFC (Issued for Construction)

The approved construction document set released by the design team for use in the field; supersedes previous interim issuances.

Build from the IFC set dated 06/12; Cloud changes since 75% CDs; Archive superseded IFC drawings.

LEED (Leadership in Energy and Environmental Design)

A widely used green building rating system with prerequisites and credits across sustainability categories; certified at Certified, Silver, Gold, or Platinum levels.

Target LEED Silver with 50 points; Track MR credits for recycled content; Submit LEED documentation at closeout.

Lien Waiver

A document executed by a contractor or supplier waiving the right to file a mechanics lien for work/materials covered by a payment.

Submit conditional lien waiver with the pay app; Collect unconditional waivers after funds clear; Require supplier waivers for major materials.

Liquidated Damages (LDs)

A pre-agreed monetary amount owed per day (or unit) of delay beyond the contractual milestone, representing estimated damages.

Contract includes $2,500/day LDs after SC; Seek time relief to avoid LDs for weather; Track critical path to mitigate LD exposure.

MEP (Mechanical, Electrical, Plumbing)

Collective term for building systems trades responsible for mechanical, electrical, and plumbing installations (often extended to MEPFP including fire protection).

Coordinate MEP overhead in BIM; Sequence MEP rough-in before drywall; Verify MEP submittals match one-line diagrams.

NTP (Notice to Proceed)

Formal authorization from the owner to begin contract work, which typically starts the contractual time for completion.

Mobilize within 10 days of NTP; Baseline the schedule 30 days after NTP; Start billable time from the NTP date.

OSHA (Occupational Safety and Health Administration)

US federal agency that sets and enforces workplace safety regulations; compliance is mandatory on construction sites.

Conduct OSHA 10 training for workers; Prepare a site-specific OSHA-compliant safety plan; Record incidents on the OSHA 300 log.

Pay Application (Payment Application)

A contractor’s formal request for progress payment, typically based on a Schedule of Values and supported by documentation.

Submit Pay App #5 with updated SOV; Include lien waivers and certified payroll; Architect certifies payment before owner funds.

Performance Bond

A surety bond guaranteeing the contractor will perform according to the contract; protects the owner from non-performance.

Provide a 100% performance bond; Surety requests a corrective action plan; Owner calls the bond after contractor default.

Preconstruction

The planning phase before construction focused on estimating, logistics, design coordination, value analysis, and risk management.

Provide ROM and DD estimates; Lead constructability reviews; Develop bid packaging and procurement plan.

Procurement

The process of sourcing, evaluating, and contracting for trades, materials, and services required to build the project.

Prequalify trade partners; Issue RFPs for steel and curtain wall; Track long-lead equipment PO dates.

Punch List

A list of incomplete or deficient items identified near the end of construction that must be corrected before final acceptance.

Repair paint touch-ups and door hardware; Track deficiencies in Procore; Achieve zero-punch before turnover.

QA/QC (Quality Assurance/Quality Control)

Planned systems and inspections to ensure work meets requirements; QA is process-oriented, QC is inspection/testing of the work product.

Implement a three-phase QC process; Perform hold-point inspections; Maintain ITPs for concrete and waterproofing.

RFI (Request for Information)

A formal question raised by the contractor to clarify design intent, resolve conflicts, or request missing information in the contract documents.

Submit RFI to clarify conflicting wall types; Escalate critical RFIs impacting the critical path; Reference RFI in related change order.

RFP (Request for Proposal)

A solicitation inviting vendors to propose solutions and pricing, evaluated on factors beyond lowest cost (e.g., team, approach, schedule).

Issue RFP for design-build parking structure; Evaluate technical and price proposals; Shortlist based on best value.

Retainage

A contractually held percentage of each payment to ensure performance and completion; released upon milestones like substantial or final completion.

Withhold 10% retainage until substantial completion; Release subcontractor retainage upon punch completion; Negotiate retainage reduction at 50% complete.

Schedule of Values (SOV)

A detailed breakdown of the contract sum into work items used as the basis for progress billing and tracking earned value.

Break down the $12M contract into SOV line items; Bill 5% on Division 09 this month; Align SOV with cost codes.

Shop Drawings

Fabricator- or vendor-prepared drawings detailing how components will be manufactured and installed, showing dimensions, connections, and coordination.

Submit structural steel shop drawings for review; Coordinate duct shop drawings with sprinkler routing; Do not fabricate until shops are approved.

Submittal

Documentation (product data, samples, shops) submitted by the contractor for design team review to verify compliance with the contract documents.

Provide product data for roofing membrane; Submit color samples for architect approval; Track submittal log by CSI section.

Substantial Completion

A contractual milestone when the work is sufficiently complete for the owner’s intended use, triggering occupancy, warranties, and often LD cessation.

Reach SC when the building is fit for intended use; Start warranties and punch at SC; LDs stop at SC if contract so states.

Takeoff (Quantity Takeoff)

The process of measuring and quantifying materials, labor, and equipment needs from drawings or models for estimating and procurement.

Perform digital takeoff of CMU from the plans; Use model-based takeoff for rebar quantities; Reconcile takeoff with addendum changes.

Time and Materials (T&M)

A cost-reimbursable pricing method where the owner pays actual labor, equipment, and material costs plus a fee; often used for unclear scope changes.

Track labor hours and material invoices for T&M change; Apply agreed markups to T&M work; Convert T&M tickets into a CO.

Unit Price Contract

A pricing structure where work is paid per measured unit (e.g., cubic yards of excavation), enabling flexible quantities within a defined scope.

Bid earthwork at $12/CY; Pay per linear foot of piping installed; Reconcile pay quantities from verified field measurements.

Value Engineering (VE)

A structured approach to improving value by optimizing function and cost without sacrificing required performance or quality.

Substitute PVC roofing for TPO to save cost with equal warranty; Re-route duct to shorten runs and reduce fan power; Propose precast instead of cast-in-place.