This
glossary contains terms commonly used in the construction industry
and was compiled to be a resource for you.
Allowance(s)
A
sum of money set aside in the construction contract for items
which have not been selected and specified in the construction
contract. For example, selection of tile as a flooring may require
an allowance for an underlayment material, or an electrical
allowance which sets aside an amount of money to be spent on
electrical fixtures.
Alternate
Bid Proposal
A stated amount of money that is added or deleted from the base
bid if the potential change in the project scope, materials
or construction methods is accepted.
Amortization
A payment plan by which a loan is reduced through monthly payments
of principal and interest.
Annual
Percentage Rate (APR)
Annual cost of credit over the life of a loan, including interest,
service charges, points, loan fees, mortgage insurance and other
items.
Appraisal
An expert valuation of property.
Architect
To be an Architect, on must have completed a course of study
in building and design, and is licensed by the state as an Architect.
An Architect typically hires and manages the design team, which
may include Civil, Structural, Electrical & Mechanical Engineers.
They also provide the construction drawings.
As-Built
Drawings
Completed project documents showing all work changes as
marked up by the General Contractor.
Back
Charge
Billings for work performed or costs incurred by one party that,
in accordance with the agreement, should have been performed
or incurred by the party to whom billed. Owners bill back charges
to general contractors, and general contractors bill back charges
to subcontractors. Examples of back charges include charges
for cleanup work or to repair something damaged by another subcontractor,
such as a tub chip or broken window.
Bid
A formal offer by a contractor, in accordance with specifications
for a project, to do all or a phase of the work at a certain
price in accordance with the terms and conditions stated in
the offer.
Bidding
Once construction drawings and specifications are completed
and approved, interested contractors with the resources and
experience to build the facility submit written estimates covering
the total cost of labor, subcontractors, materials, expenses,
overhead, and fee to construct the facility. Often, the contractor
that submits the lowest bid is awarded the project provided
the firm meets minimum qualifications.
Bidding
requirements
The procedures and conditions for the submission of bids. The
requirements are included ion documents, such as the notice
to bidders, advertisements for bids, instructions to bidders,
invitations to bid, and sample bid forms.
Blue
Print(s)
A type of copying method often used for architectural drawings.
Usually used to describe the drawing of a structure which is
prepared by an architect or designer for the purpose of design
and planning, estimating, securing permits and actual construction.
Builder's
Risk Insurance
Insurance coverage on a construction project during construction,
including extended coverage that may be added for the contract
for the customer's protections.
Building
Codes
Community ordinances governing the manner in which a building
may be constructed or modified.
Certificate
of Occupancy
C.O. - An abbreviation for "Certificate of Occupancy". Issued
to owner by the public building officials after their inspection
is complete and the project is deemed to comply with the building,
fire, and other applicable code provisions.
Change
Order
1. The client's written order to the contractor, which
authorizes a change in the construction work and contract time
and/or amount. Typically, the design professional also signs
the change order and then issues it to the contractor.
2. Modifications to the contract documents after the
project begins.
3. Written order to the contractor signed by the owner
and engineer/architect, issued sometimes even after the execution
of the contract, authorizing a change in the work or an adjustment
in the contract sum or the contract time. A change order may
be signed by the architect or engineer, provided they have written
authority from the owner for such procedure and that a copy
of such written authority is furnished to the contractor upon
request. A change order may also be signed by the contractor
if he agrees to the adjustment in the contract sum or the contract
time. The contract sum and the contract time may be changed
only by change order.
Commercial
Construction
Includes the construction of such projects as office buildings,
shopping centers, sports complexes, and hotels.
Commissioning
The procedure by which a completed building or manufacturing/industrial
process is tested and certified to be in operable condition
(the condition is rendered by the plan and design function).
Conceptual
Design
The first phase of design, in which drawings are the dominant
tool and product. Usually, drawings in this phase are composed
of simple, single-line floor plans, building sections, elevations,
and site plans.
Conceptual
Estimating
A process of assigning cost parameters to a project during the
earliest phase of project design, prior to establishment of
a defined scope or plan.
Constructability
Analysis
A process that studies project plans to determine how efficiently,
effectively, and safety the plan can be built.
Construction
Documents
The written and drawn materials which are the result of a design
team's efforts. They include working drawings, specifications,
and other construction documents. They detail all information
needed to construct the project and all legal requirements of
the project.
Design
Development
The period following the schematic design stage, during which
detailed scale drawings, specifications, and construction materials
lists are produced. This includes detailing floor plans, elevations,
and sections and producing drawings that show all building elements
including staircases, windows, doors, structural plans, lighting,
electrical outlets, electronics, plumbing, and mechanical systems.
Daily
Construction Report
A written record of the days activities; weather conditions,
work accomplished, number of personnel for each trade involved,
equipment involved, materials received, visitors or inspectors
present, and problems encountered.
Design-Bid-Build
Separate organizations with separate contracts with an owner
wherein design plans and specs are first prepared by a licensed
Architect/Engineer and then awarded through a competitive bid
process to select a contractor to complete the construction.
This delivery method proceeds in a linear or sequential fashion;
design is completed before bidding, and bidding is completed
before construction.
Design-Build
The entity contractually responsible for delivering project
design and construction. The Design-Builder can assume several
organizational structures, the four most common being a firm
that possesses both design and construction resources in-house;
a joint venture between designer and contractor; a contractor-led
team with the designer in a subcontractor role; and a design-led
team with the contractor in a subcontractor role.
Draw
The amount of progress billings on a contract that is currently
available to a contractor under a contract with a fixed payment
schedule.
Estimating
The process of calculating the cost of a project. This can be
a formal and exact process or a quick and imprecise process.
Extras
Additional work requested of a contractor, not included in the
original plan, which will be billed separately and will not
alter the original contract amount, but increase the cost of
a project.
Fast-Tracking
1. A method of construction management which involves
a continuous design-construct operation. Construction work starts
before final plans and specifications are complete. For example,
excavation may start before superstructure plans and details
are finished.
2. Sequencing construction activities so that some portions
of the project enter construction before design is completed
on other portions.
3. A method in which the design and construction phases
overlap, with the construction of phase one beginning before
the design of the next phase is complete.
Feasibility
Studies
A detailed investigation and analysis of factors influencing
the project to determine if the project is viable, such as type
of structure, the location of the proposed project, the sources
and availability of funding, and availability of utilities are
examined and weighed against the financial return expected.
Fixed
Price or Lump Sum Contract
A contract with a set price for the work. See Time and Materials
Contract.
Fixed
Rate Mortgage
A mortgage with an interest rate that remains the same over
the years.
General
Conditions of the Contract
Contains the governing articles that identify the parties of
the contract and define the specific roles and responsibilities.
General in scope and consist of standard articles that apply
to most construction projects. As opposed to general conditions
of the project which are ancillary or supplemental services
(temporary electrical, trash removal, etc.) which are required
to do the job, but will not be a part of the job.
General
Contractor
A contractor who enters into a contract with the owner of a
project for the construction of the project and who takes full
responsibility for its completion, although the contractor may
enter into subcontracts with others for the performance of specific
parts or phases of the project. They are responsible for the
physical construction of the project and are often referred
to as the prime or main contractor.
General
Liability Insurance
Protects the contract from claims resulting from the contractor's
construction operations that result in bodily injury or property
damage to a third party.
Green
Construction
An organized effort to design and build buildings using a process
and materials which promote environmental sustainability.
Hazard
insurance
Protection against damage caused by fire, windstorms, or other
common hazards. Many lenders require borrowers to carry it in
an amount at least equal to the mortgage.
Industrial
Construction
Includes the construction of such projects (building and production/process
lines) as manufacturing facilities, processing plants, power-generating
plants, and factories.
Institutional
Construction
Projects usually constructed for private or government entity,
including schools, colleges, correctional facilities, and hospitals.
Interest
The cost paid to a lender for borrowed money.
Loan
The amount to be borrowed.
Loan
to Value Ratio
The ratio of the loan amount to the property valuation and expressed
as a percentage. E.g. if a borrower is seeking a loan of $200,000
on a property worth $400,000 it has a 50% loan to value rate.
If the loan were $300,000, the LTV would be 75%. The higher
the loan to value, the greater the lender's perceived risk.
Loans above normal lending LTV ratios may require additional
security.
Master
Planning
1. A plan, usually of a community or city, made to guide
or restrict future development.
2. Master plans are developed for new and existing campuses
for health systems, senior living communities, and universities
which often includes market demographic analysis, volume projections,
budgets, schedules, and site planning.
3. An overall scheme for phased work or construction. It
combines forecasts of future activities, services and strategic
planning with the organized development of physical facilities
to meet staffing and space needs projections, typically for
a period of 10 to 20 years.
Mechanical
Installation
Installation of mechanical systems (i.e. HVAC) on the machine
and process equipment in an industrial project.
Mechanics
Lien
A lien on real property, created by statue in many years,
in favor of persons supplying labor or materials for a building
or structure, for the value of labor or materials supplied by
them. In some jurisdictions, a mechanics lien also exists for
the value of professional services. Clear title to the property
cannot be obtained until the claim for the labor, materials,
or professional services is settled. Timely filing is essential
to support the encumbrance, and prescribed filing dates vary
by jurisdiction.
Mortgage
Loan secured by land.
Mortgage
Broker
A broker who represents numerous lenders and helps consumers
find affordable mortgages; the broker charges a fee only if
the consumer finds a loan.
Mortgage
Company
A company that borrows money from a bank, lends it to consumers
to buy property or a building, then sells the loans to investors.
Mortgage
Deed
Legal document establishing a loan on property.
Mortgagee
The lender who makes the mortgage loan.
Mortgage
Loan
A contract in which the borrower's property is pledged as collateral.
It is repaid in installments. The mortgagor (buyer) promises
to repay principal and interest, keep the property insured,
pay all taxes and keep the property in good condition.
Negotiated
Contract
Process to allow the owner and contractor the opportunity to
come to an agreement about the project costs and contractual
arrangements.
OSHA
Occupational Safety and Health Administration
Owner's
Representation
Complete Owner's Representative services, from project concept
through completion, are offered including acting as an owner's
single source of responsibility for all project related needs
and leading the planning, design, and construction phases of
the project.
Permit
A governmental municipal authorization to perform the building
process.
Pre-Qualifications
Based on the contractor's financial stability, experience, or
any other qualifications the owner chooses to include.
Principal
The original amount of the loan, the capital.
Program
Development
The early stages of a project, during which the architect and
owner discuss the goals, needs, and function of the project;
design expectations and available budget; and pertinent building
code and zoning regulations. The architect then prepares a written
statement setting forth design objectives, constraints, and
criteria for the project, including special requirements and
systems and site requirements.
Program
Management
Delivering a project or projects from concept through completion
using a team of experts whose sole focus is obtaining the owner's
goals. Program management combines the ability and resources
to define, plan, implement, and integrate every aspect of the
comprehensive program.
Project
Schedule
A schedule wherein activities are assigned a
duration and sequenced in a logical order.
Property
Survey
A survey to determine the boundaries of your property. The cost
depends on the complexity of the survey.
Punch
List
1. A list of incomplete or unacceptable items, which
ideally is compiled when the project is 99 percent complete.
The contractor should perform its own punch list prior to the
A/E review; however, it is the A/E's list that generally is
referred to as the punch list.
2. Record of deficiencies found during the inspection that
must be corrected or completed before the project is accepted.
Punch
Out
The act of correcting the items listed on the punch list.
Quality
Management
The development, implementation, and administration of the quality-control
system by the contractor.
Real
Estate Services
Services range from site selection and analysis to assistance
in acquisition all the way through to securing the necessary
approvals.
Schematic
Design
Scaled floor plans, building sections, elevations, and site
plans. Schematic designs almost always include outline specifications
indicating the types of engineering systems, glazing (glass),
and doors and may include three-dimensional perspectives of
the exterior as well as models of the entire building or portions
of it.
Site
Plan
Drawings that provide an overhead perspective on how buildings,
parking areas, and other facilities would appear on a site.
A site plan might also show service routes, landscaping, site
zoning, sidewalks, expansion forecasts, neighboring streets,
and other buildings.
Specifications
A.K.A. Specs. Detailed written descriptions of building systems,
materials and fixtures to supplement and add specificity to
the architects' and/or engineers' drawings.
Time
and Materials Contract
A construction contract which specifies a price for different
elements of the work such as cost per hour of labor, overhead,
profit, etc. A contract which may not have a maximum price,
or may state a 'price not to exceed'.
UL
(Underwriters' Laboratories)
An independent testing agency that checks electrical devices
and other components for possible safety hazards.
Value
Engineering (V.E.)
1. Substituting building types, systems, materials or finishes
that reduce costs without compromising objectives and needs.
The process exposes potentially hidden building costs that may
not have been anticipated for the building's operations.
2. The process in which the design is analyzed to reduce the
project cost without sacrificing the needs of the owner.
Walk-Through
A final inspection of a property and building before "Closing"
to look for and document problems that need to be corrected.
Warranty
In construction there are two general types of warranties. One
is provided by the manufacturer of a product such as roofing
material or an appliance. The second is a warranty for the labor.
For example, a roofing contract may include a 20 year material
warranty and a 5 year labor warranty. Most contractors provide
a one year warranty. Any major issue found during the first
year should be communicated to the builder immediately. Small
items can be saved up and presented to the builder for correction
periodically through the first year after closing.
Zoning
A governmental process and specification which limits the use
of a property e.g. single family use, high rise residential
use, industrial use, etc. Zoning laws may limit where you can
locate a structure. Also see building codes.
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