Construction EstimatingGlossary

A formal written modification to the bid documents issued during the bidding period that becomes part of the contract.

A dollar figure carried in the contract for a scope that has not yet been finalized, with a true-up at the time of selection.

A separate add or deduct price submitted alongside the base bid that gives the owner the option to include or exclude defined scope.

A pre-built grouping of materials, labor, and equipment for a complete installed unit, used to speed up estimating.

A surety bond submitted with a bid that guarantees the contractor will sign the contract at the bid price if awarded.

A formal, itemized document listing the quantities of every scope of work in a construction project, used as the basis for pricing and contract.

Abbreviation for bill of quantities — the itemized list of scope quantities and unit rates used to price and administer a construction contract.

A written modification to the original construction contract that changes the scope, schedule, or price.

A reserve amount included in an estimate to cover unknown risks and unforeseen costs that arise during construction.

A pricing structure where the owner reimburses the contractor for actual costs plus an agreed fee, with no fixed total price.

The standard 50-division coding system used to organize construction specifications, estimates, and bills of quantities in North America.

A budget allowance for the increase in material and labor costs between the date of the estimate and the date the work is performed.

A pricing structure with a guaranteed total amount the owner will pay for the defined scope, regardless of actual contractor costs.

The project-specific overhead costs that the contractor incurs to manage and execute the project but that are not tied to a specific work activity.

The direct costs of physical construction — material, labor, equipment, subcontractors, and contractor markup.

The total cost of an employee beyond base wages — taxes, insurance, benefits, and other employer costs — expressed as a percentage of wages.

A signed document in which the contractor or supplier waives the right to file a mechanics lien for the amount paid.

A fixed total price for a defined scope of work, with the contractor absorbing the risk of cost overruns within that scope.

A list of every physical material required to build a project, with quantities and units used to price purchase orders and subcontractor scopes.

The markup added to direct costs to cover the contractor’s home-office overhead and profit margin — the contractor’s fee.

The monthly invoice document the contractor submits to the owner requesting a progress payment for completed work.

A surety bond that guarantees the contractor will complete the contracted work according to the terms of the contract.

A placeholder cost figure inserted in an estimate when actual pricing is not yet available, intended to be replaced before bid submission.

The minimum hourly wage and fringe benefit rate that contractors must pay workers on certain government-funded construction projects.

A periodic payment from the owner to the contractor for work completed during a billing period, based on the schedule of values.

A detailed list of every measurable quantity required to build a project, organized by scope and used to drive the cost estimate.

A percentage of each progress payment the owner withholds from the contractor as security until project completion.

A formal written question from the contractor to the design team during construction asking for clarification of the documents.

A formal solicitation from an owner asking contractors to submit qualifications, approach, and price for a construction project.

A formal request from the owner asking contractors to submit qualifications (or pricing) for a project or scope.

The widely used construction cost database that publishes unit prices for thousands of construction work items, updated annually.

A breakdown of the contract sum into line items that defines how progress payments will be calculated.

Project costs that are not tied directly to physical construction — design fees, permits, financing, legal, insurance, and other indirects.

The process of measuring and counting items from construction drawings to determine the materials and labor needed for a project.

A billing structure where the contractor is paid hourly labor billing rates plus material cost with markup, with no fixed total.

A classification system that organizes construction information by building element rather than by work result.

The price per unit of work — for example per cubic yard or per linear foot — that an estimator quotes for a single scope item.

A percentage added to the net measured material quantity to account for cut-off, breakage, and installation waste.