Glossary of Terms

We realize the building and remodeling process can be daunting. We want to help you understand the process and some of the terms that may be unfamiliar to you.

Here are a few common construction and remodeling terms:

Amount stated in the bid to be added or deducted from the base bid amount proposed for alternate scope, materials and/or methods of construction.

Application for Payment
Contractor’s written request for payment for completed portions of the work and, for materials delivered or stored and properly labeled for the respective project.

One who designs and supervises the construction of buildings or other structures.

Budget (Construction Budget/Project Budget)
1. Construction Budget: The total estimated cost of work specifically related to materials, labor, equipment, and building permits required for the project.

2. Project Budget: The estimated cost of all project expenses including the cost of construction, design fees, furniture,

Building Code
Minimum acceptable construction requirements defined and required by local, county and state agencies having jurisdiction over the project.

Building Inspector/Official
A government representative authorized to inspect construction for compliance with applicable building codes, regulations and ordinances.

Building Permit
A document issued by a governing authority, such as a city or county building department, granting permission to undertake a construction project.

Change Order
A written document between the owner and the contractor signed by the owner and the contractor authorizing a change in the work or an adjustment in the contract sum or the contract time. A change order may be additional compensation or time; or less compensation or time known as a Deduction (from the contract) the amount deducted from the contract sum by change order.

Prevailing regulations, ordinances or statutory requirements set forth by governmental agencies associated with building construction practices and owner occupancy, adopted and administered for the protection of public health, life safety and welfare. (see Building Code)

Construction Cost
All direct contractor costs for labor, material, equipment, and services; contractors overhead and profit; and other direct construction costs. Construction cost does not include the compensation paid to consultants hired by the Owner.

Construction Management Contract 
A written agreement wherein responsibilities for coordination and accomplishment of overall project planning, design and construction are given to a construction management firm. The building team generally consists of the owner, contractor and designer or architect.

A properly licensed individual that agrees to furnish labor, materials, equipment and associated services to perform the work as specified for a specified price.

Design-Build Construction 
A construction process where the design and construction is provided by a single entity.

Design-Development Phase 
The second phase of the architect’s basic services wherein the architect prepares drawings and other presentation documents to fix and describe the size and character of the entire project as to architectural, structural, mechanical and electrical systems, materials and other improvements as may be appropriate. Identification of probable construction cost should be included at the end of this phase.

Direct Cost
All items of expense directly incurred by or attributable to a specific project, assignment or task. These costs can include materials, labor, equipment and other costs incurred in the interest of the project.

Final Acceptance 
Acceptance by the owner of the work by the contractor when the owner deems the work completed in accordance with the contract requirements. Final payment is not made until the owner confirms final acceptance.

Final Inspection 
A final site observations by authorities having jurisdiction of the project, the contractor(s), owner and owner’s authorized representative prior to issuing the final payment.

Final Payment 
The last payment from the owner to the contractor of the entire unpaid balance of the contract sum as adjusted by any approved change orders. (see Final Acceptance)

An abbreviation for furniture, fixtures and equipment required by the project and provided by the owner. These costs are included in the Project Cost budgets and not in Construction Cost budget.

General Contractor 
Properly licensed individual or company having primary responsibility for the work.

Inspection List (punch list) 
A list prepared by the owner or his/her authorized representative of items of work requiring immediate corrective or completion action by the contractor.

Lien Release
A document that voids the legal right of a contractor, subcontractor or supplier to place a lien against an owner’s property. A lien release assures the owner that a contractor, subcontractor, supplier or vendor has received payment for work certified for payment.

Lien Waiver 
A document from a contractor, subcontractor, material supplier or other construction professional, having lien rights against an owner’s property which relinquishes all or part of those rights.  Lien waivers are typically used for processing progress and final payments to prime or main or subcontractors as follows: Conditional Lien Waiver, Unconditional Lien Waiver, and Final Lien Waiver.

A term used to describe an Owner who takes on the responsibilities of the general contractor to build a specific project.

Owner-Construction Management Agreement
Contract between construction manager and client for professional services.

A screening process wherein the owner or his/her appointed representative gathers background information from a contractor or construction professional for selection purposes. Qualifying considerations include competence, integrity, dependability, responsiveness, bonding rate, bonding capacity, work on hand, similar project experience, and other specific owner requirements.

Project Cost 
All costs for a specific project including costs for land, professionals, construction, furnishings, fixtures, equipment and financing.

Reimbursable Expenses (or Costs) 
Amounts expended for or on account of the project which, in accordance with the terms of the appropriate agreement, are to be reimbursed by the owner.

Schematic Design Phase 
The first phase of the architect’s basic services in which the architect consults with the owner to ascertain the requirements of the project and prepares schematic design studies consisting of drawings and other documents showing the scale and project components for the owner’s approval.

A detailed description of materials, methods, and quality of work for a specific project.

A proposed replacement or alternate offered in lieu of and represented as being equivalent to a specified material or process.

An individual or firm having a written contract with a subcontractor to perform a portion of the work.

T&M (Time and Materials)
An abbreviation for a contracting method called Time and Materials where payment is based on the contractor or consultants actual cost for labor, equipment, materials, and services plus a fixed amount to cover the contractors overhead and profit.

Assurances provided by a contractor that the work will be free of defects or failure for a certain period of time. If the work fails within the contract specified period of time the contractor, vendor or supplier will be obligated to correct the failed work. The majority of construction work on a project is warranted for one year but major systems and equipment will have a manufacturer’s warranty for a longer period of time.

The entire scope of the project being performed for a project including labor, materials, equipment, and other associated items necessary to fulfill requirements of the contract.

Restrictions of areas or regions of land within specific geographical areas based on permitted building size, character, and uses as established by governing urban authorities.