Construction glossary.

Accounts payable

Money your company owes to subcontractors, suppliers and vendors for work, materials and services already billed.

Accounts receivable

Money owners and clients owe your company for work you've billed, including retainage held until completion.

AI Agent

Software that uses an AI model to carry out multi-step tasks, like reading documents, checking data and drafting actions, toward a goal.

AIA G702

The AIA Application and Certificate for Payment: the one-page summary of a pay application, signed by the contractor and certified by the architect.

AIA G703

The AIA Continuation Sheet: the line-by-line detail of a pay application, showing progress and retainage for each schedule of values item.

Allowance

A placeholder amount in the contract for a specific item not fully defined at bid time, reconciled against actual cost later.

API (Application Programming Interface)

A defined way for software systems to request and exchange data with each other without manual export and import.

As-Built Drawings

Drawings marked up to show how the project was actually built, including every field change from the original design.

Audit Trail

A permanent, time-stamped record of who created, changed or approved each piece of data, and what it was before.

B

Back charge

A charge a contractor issues to a subcontractor or supplier for costs it incurred because of their defective work, damage, cleanup or failure to perform.

Backlog

Contracted revenue not yet earned: the work a contractor has signed but not yet performed.

Bid Leveling

Comparing subcontractor bids line by line, adjusting for scope gaps and exclusions, so they can be judged on equal terms.

Bonding capacity

The maximum single-job and total work-on-hand a surety will bond for a contractor, based mainly on its financial strength and track record.

Building Information Modeling (BIM)

A process of creating and managing a shared 3D model of a building that carries data about its parts, not just geometry.

C

Certified payroll

A weekly payroll report, signed under penalty of law, that proves workers on a prevailing wage job were paid the required wages and fringes.

Change Event

Any occurrence on a project that might change cost, scope or schedule, logged before anyone knows whether it will become a change order.

Change Order (CO)

A signed agreement between owner and contractor that changes the contract scope, price, time, or a combination of them.

Closeout

The final phase of a project: work finished, documents delivered, final payments and lien waivers exchanged, and the job closed financially.

Commitment

A contractual obligation to spend money, such as a subcontract or purchase order, tracked against the budget before any invoice arrives.

Conditional Lien Waiver

A lien waiver that only takes effect once the stated payment is actually received and clears.

Construction Change Directive (CCD)

A written order from the owner directing a change in the work before owner and contractor agree on price or time.

Construction Manager at Risk (CMAR)

A delivery method where the CM gives preconstruction advice, then commits to building the project for a guaranteed maximum price.

Contingency

Money set aside in a budget or contract to cover unknown costs and risks that are expected but can't be pinned down yet.

Cost code

A code that classifies a cost by type of work, and usually by cost type, so budgets and actuals can be compared at a useful level of detail.

Cost report

A job report showing, by cost code, the original and revised budget, committed cost, actual cost, cost-to-complete, forecast and variance.

Cost-Plus Contract

A contract where the owner reimburses the contractor's actual costs plus a fee, either a percentage or a fixed amount.

Cost-to-complete

The estimated remaining cost to finish a job, based on remaining commitments, remaining labor and known risks, not just budget minus actuals.

Critical Path

The longest chain of dependent activities in a schedule; any delay to an activity on it delays project completion.

CSI MasterFormat

The Construction Specifications Institute's standard numbering system that organizes specifications into divisions like 03 Concrete and 26 Electrical.

D

Daily Log

The superintendent's dated record of each day on site: weather, manpower, work performed, deliveries, inspections, visitors, delays and issues.

Davis-Bacon Act

US federal law requiring locally prevailing wages and fringe benefits on federally funded or assisted construction contracts over $2,000.

Design-Build

A delivery method where one entity holds a single contract with the owner for both design and construction.

Digital Twin

A digital model of a physical asset or project that stays connected to real-world data, so it reflects current conditions.

E

Earned revenue

The portion of contract value a contractor has earned to date, typically percent complete times total contract value.

Equipment costing

Charging owned or rented equipment to jobs at rates that recover its full cost of ownership and operation.

ERP (Enterprise Resource Planning)

Software that runs a company's core business processes, like accounting, payroll, purchasing and job cost, on one database.

Estimate at completion

The forecast total cost of a job when finished: cost to date plus estimated cost to complete.

F

Final Completion

The point when all contract work, punch list and closeout requirements are done and final payment becomes due.

Float

The amount of time an activity can slip without delaying the project finish (total float) or the next activity (free float).

G

General conditions

Job-specific costs to run the project that aren't tied to a single trade: site staff, trailers, temporary utilities, cleanup and similar.

Gross profit

Contract revenue minus direct job costs; for a contractor, the margin a job contributes before company overhead.

Guaranteed Maximum Price (GMP)

A cost-plus contract with a ceiling: the owner pays actual cost plus fee up to a cap, and the contractor absorbs overruns.

H

Human-in-the-Loop

A design where automated or AI systems propose actions, and a person reviews and approves them before they take effect.

I

Integrated Project Delivery (IPD)

A delivery method where owner, designer and builder sign one multi-party agreement and share project risk and reward.

J

Job costing

Tracking every dollar of labor, material, equipment and subcontract cost against the specific job and cost code it belongs to.

Joint Check

A check made payable to two parties, typically a subcontractor and its supplier, so the supplier gets paid and lien risk is reduced.

L

Labor burden

The cost of employing a worker beyond base wage: payroll taxes, workers' comp, insurance and benefits, as a percent or per-hour add-on.

Lien Waiver

A document in which a contractor, sub or supplier gives up its right to file a mechanics lien for a stated amount or period, usually in exchange for payment.

Liquidated Damages (LDs)

A fixed amount per day, set in the contract, that the contractor owes the owner for finishing late.

Look-Ahead Schedule

A short-range schedule, usually two to six weeks, that breaks the master schedule into the specific tasks crews will perform next.

Lump Sum Contract

A contract where the contractor agrees to deliver a defined scope for one fixed price, keeping savings and absorbing overruns.

M

Margin fade

A decline in a job's projected gross profit margin over time, from bid to forecast to final.

Mechanics Lien

A legal claim against a property filed by an unpaid contractor, subcontractor or supplier who improved it.

N

Notice to Proceed (NTP)

The owner's written authorization for the contractor to start work, which usually starts the contract clock.

O

OCR (Optical Character Recognition)

Technology that reads text from scanned documents, PDFs and photos and turns it into data software can use.

Over billing

When billings to date exceed revenue earned to date on a job; recorded as a liability called billings in excess of costs and estimated earnings.

Overhead

Company-level costs not tied to any one job, such as office rent, executives, accounting and IT, paid for out of jobs' gross profit.

P

Pay Application (Pay App)

A contractor's periodic, itemized request for payment based on work completed and materials stored against the schedule of values.

Pay-When-Paid

A subcontract clause that sets the timing of sub payment to follow the GC's receipt of payment from the owner.

Percent complete (cost-to-cost)

A job's progress measured as cost incurred to date divided by total estimated cost; the most common basis for recognizing contract revenue.

Potential Change Order (PCO)

A priced proposal for a change, submitted to the owner for approval before it becomes an executed change order.

Preliminary Notice

A notice a sub or supplier sends early in a job to preserve its lien rights, telling the owner and GC it is furnishing labor or materials.

Prevailing wage

The minimum hourly wage and fringe benefits that must be paid to each labor classification on covered public construction projects.

Punch List

The list of incomplete or defective items that must be fixed before the owner accepts the work and final payment is released.

Purchase order

A document issued to a supplier that authorizes a purchase of materials, equipment or services at agreed quantities and prices.

R

Request for Information (RFI)

A formal written question from the contractor to the design team asking them to clarify, fill a gap in, or resolve a conflict in the contract documents.

Retainage

A percentage of each progress payment that the owner (or GC) holds back until the work is substantially or finally complete.

S

Schedule of Values (SOV)

The breakdown of the contract sum into line items with assigned values, used as the basis for progress billing.

Single Source of Truth (Data Core)

One authoritative record for each piece of data, so every team and report reads the same number instead of copies.

Stored Materials

Materials delivered and stored on site or in an approved off-site location but not yet installed, which may be billed if the contract allows.

Subcontract

A contract between the prime contractor and a trade contractor to perform a defined part of the prime contract's scope.

Submittal

Shop drawings, product data, samples or other documents a contractor sends to the design team for review before buying or installing materials.

Substantial Completion

The point when the work is complete enough for the owner to occupy or use it for its intended purpose.

T

Takeoff

The process of measuring and counting quantities of materials and work from drawings to build an estimate.

Three-way match

An AP control that checks an invoice against its purchase order and the receiving record before payment is approved.

Time and Materials Ticket (T&M Ticket)

A daily field record of labor hours, materials and equipment used on extra work, signed by the other party as backup for payment.

U

Unconditional Lien Waiver

A lien waiver that takes effect immediately on signing, confirming payment has already been received for the stated amount.

Under billing

When revenue earned to date exceeds billings to date; recorded as an asset called costs and estimated earnings in excess of billings.

Union fringe

Per-hour contributions a union contractor pays into health, pension, annuity and training funds, as set by the collective bargaining agreement.

V

Value Engineering (VE)

A structured review of a design to lower cost or improve value without reducing required function, quality or performance.

W

Webhook

An automatic message one system sends to a URL you choose the moment a specific event happens, like a change order being approved.