New to preconstruction, or just need a refresher on the day-to-day terminology? We’ve got you covered. Check out some of the most common preconstruction terms in this glossary.
New to preconstruction, or just need a refresher on the day-to-day terminology? We’ve got you covered. Check out some of the most common preconstruction terms in this glossary.
Architect: An architect is the person or company hired by the owner to design the project being built. An architect will issue all project drawings and specifications to determine the scope of work.
Contractor: A contractor is a company licensed to perform certain types of construction activities. Contractor is a more general term for either a general contractor or a subcontractor.
General Contractor (GC): A general contractor is hired by an owner to manage and deliver a construction project. The general contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and the communication of information to all parties throughout the course of a project.
Owner: An owner is the private or public person or entity that owns and operates the land where a project is built and pays for all construction costs. The owner decides the scope, program, and budget for a project prior to design.
Subcontractor: A subcontactor is a business or person that carries out work for a company as part of a larger project. Each subcontractor specializes in a certain scope (or scopes) of work (ex: painters, electricians, plumbers, etc.). Subcontractors are sometimes referred to as “trades.”
Vendor: A vendor is traditionally defined as a party in the supply chain that makes goods and services available to companies or consumers.
Competitive Bidding: Competitive bidding is a process of issuing a public bid with the intent that companies will put together their best proposal and compete for a specific project. By law, this process is required for every government agency that issues a bid.
Negotiated Bidding: Negotiated bidding is when an owner negotiates a price for services with a single GC. In this method, general contractors do not compete against each other for the lowest possible price and owners are not provided comparative pricing.
Cost-Plus Contract: In a construction cost-plus contract, the owner agrees to cover the actual expenses of the project. These costs include labor and materials, plus other costs incurred to complete the work. The “plus” part refers to a fixed fee agreed upon in advance that covers the GC’s overhead and profit.
GMP (Guaranteed Max Price): GMP is used for larger, more complicated commerical construction projects. Under a GMP contract, the GC is compensated for actual costs incurred, plus a fixed fee which covers risk. The contractor is responsible for any cost overruns, unless the GMP has been increased via formal change order that changes the scope of the project. The contractor builds in a contingency fee to reduce their risk and cover any unforeseen costs. Distribution of any cost savings depends on the contract.
Fixed Price Contract: A fixed-price contract is a type of contract where the payment amount does not depend on resources used or time expended. This is opposed to a cost-plus contract, which is intended to cover the costs with additional profit made.
Lump-Sum Contract: A lump-sum contract is typically used to reduce design and contract administration costs. It is called a lump-sum because the GC is required to submit a total and global price instead of bidding on individual items. A lump-sum contract is the most recognized agreement form on simple and small projects and projects with a well-defined scope or construction projects where the risk of different site conditions is minimal.
Addenda: An addenda is a file, document, or additional information added after the initial publishing of a project that may or may not have an impact on the scope, price, and duration of the project.
Bid: A bid (sometimes called an estimate or a proposal) details the cost of labor and materials needed to complete a specific project (for GCs) or a portion of a specific project (for subcontractors).
Bidding Requirements: Bidding requirements are the specifications, procedures, and conditions for the submission of bids. The requirements are included in documents such as the notice to bidders, advertisements for bids, instructions/invitations, and sample bid forms.
Bid Leveling: Bid leveling is the process of confirming that bidders within the same bid package are pricing work on an even level with all factors considered.
Budget Bid: A budget bid is a rough estimate of the costs of construction, which is prepared without a lot of detailed information on the quality or type of materials.
Conceptual Estimate: A conceptual estimate is an estimate prepared using engineering concepts and avoiding the counting of individual pieces. As the name implies, conceptual estimates are generally made in the early phases of a project, before construction drawings are completed.
Contract Bid: A contract bid it the price for which the contractor is prepared to build and is usually based on a complete set of drawings and/or outline specifications.
Estimating: Estimating is the process of calculating the cost of a specific project.
Estimator: An estimator is the individual who determines the cost of a project.
Hit Rate: A hit rate is the rate at which a contractor wins projects they bid on. For example, a 20% hit rate says for every five jobs you bid on, you are awarded one.
Job Walk: A job walk is a date and time (set by the GC or owner) when bidders can visit the job site to gather more information so that they can submit a more accurate bid.
Plan View: A plan view is the drawing of a structure in a specific project.
Phased Bid: A phased bid is used when certain parts of a project will be completed before the pricing or design is ready on other portions. For example, one half of a floor is fully built out before the design and budget of the other half is done.
Plug: Plugs are used during bid leveling process. Plugs are numbers used to fill in or counteract any missed/inaccurate information in the subcontractor’s initial bid to level out the playing field.
Public Plan Room: A public plan room is a publicly posted site where GCs or owners are able to list projects they are bidding and where bidders can search for opportunities, view plans, and submit bids.
Scope of Work: The scope of work is the category of work a subcontractor performs (electrical, plumbing, HVAC, drywall, etc.).
Qualification: A qualification is an application subcontractors or vendors submit that details their credentials and ability to complete a project for a GC or owner.
RFI: “Request for Information.” This typically happens after the job walk and after the bidder has reviewed the bid documents. The GC or owners sets a date and time when the bidders can submit any questions they have regarding the project, and the GC, owner, or architect then sends a message out with all the answers.
RFP: “Request for Proposal.” This is also called a bid invitation, or “Invitation to Bid” (ITB).
Sealed Bid: A sealed bid is when the GC is unable to see bid amounts or details until a date and time set by the GC owner when all bids are due. Bidders cannot submit late bids for a sealed bid project. Once the due date passes, a designated bid administrator is the only person who can unseal the bids for review.
Suppliers: Suppliers are anyone contracted out to provide material supplies for a project. This term is sometimes interchangeable with “vendor.”
Tender: Tender is another term for bid/proposal used outside the United States.
Walk-through: A walk-through is a final inspection of a project before “closing” to look for and document problems that need to be corrected. If there are still minor things to complete, a “punch list” will be issued to the trades to complete.
