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A financial guarantee that a bid has been submitted in good faith, ensuring that the contractor will enter into a contract at the bid price if awarded.

The process of measuring and counting the amount of material, labor, and equipment necessary for a construction project. Methodology involves analyzing project drawings and specifications to accurately quantify materials.

A systematic method to improve the value of products or services by examining function. Value is increased by either improving function or reducing cost.

A technique in project management that seeks to minimize the fluctuations in resource usage by evenly distributing tasks throughout the project duration.

An estimating method that involves calculating the cost of a single unit of work and then multiplying by the quantity needed to determine the total cost. It's frequently used for materials and standardized tasks.

Expenses directly tied to the production of a construction project, including labor, materials, equipment, and subcontractor costs. These are variable and change according to the size and scope of the job.

The amount by which revenue from sales exceeds costs. In construction, it’s a percentage added to estimates to ensure the business earns a profit from the project.

An initial project cost forecast usually based on limited information. It helps to determine project feasibility and budget planning in early phases.

A method to roughly estimate construction costs based on the project’s total square footage. Useful for early budget assessments but not for final contracting.

A contract type where the contractor is reimbursed for all project costs plus a predetermined profit. It provides flexibility but requires careful monitoring to control expenses.

A bond issued to one party of a contract as a guarantee against the failure of the other party to meet the obligations specified in the contract.

A type of contract where the price is set per unit of work completed. The total cost is uncertain and depends on the quantities needed for the project.

A comprehensive cost estimate considering all aspects of the project, including labor, materials, equipment, and indirect costs, based on a detailed project plan.

An allowance in the project budget for increases in material and labor costs over time due to inflation or supply chain fluctuations.

A process of recording the bids received from contractors, comparing them, and analyzing the results to aid in the awarding of the construction contract.

Additional costs of labor beyond wages, including benefits, insurance, taxes, and training. Its inclusion in cost estimates ensures the total cost of employing labor is accurately reflected.

An additional percentage added to the subcontractor’s cost to cover overhead and profit related to subcontracted work. It’s included in the general contractor's bid.

A technique where costs are estimated by identifying and pricing 'assemblies' of components required to construct different sections of a project.

A hierarchical decomposition of the total scope of work to be carried out by the project team to accomplish project objectives and create the required deliverables.

An amendment to the original construction contract to account for a change in scope, material, or work directive. It affects the project’s cost and/or schedule.

A fixed price contract where the contractor agrees to complete the project for a set amount regardless of the actual costs involved. This transfers more risk to the contractor.

The process where contractors submit a proposal to complete a project for a certain amount of money. Accuracy is critical as it forms the basis of a potential contract agreement.

Expenses not directly allocated to a specific construction project, such as administrative costs, security, and temporary facilities. Also known as overhead costs, these can be either fixed or variable.

A budgetary reserve to cover potential unforeseen costs during construction, typically expressed as a percentage of the total estimate. It helps mitigate risk and prevent budget overruns.

Detailed description of materials, workmanship, and construction procedures that must be met by the contractors. Specifications guide the quantity takeoff process.

Contract type where payment is based on the actual cost of labor, at specified hourly rates, and materials. It offers flexibility but requires diligent tracking of time and materials used.

Ongoing business expenses not directly attributable to any specific project, such as utilities, rent, and management salaries. These costs must be factored into estimates to ensure profitability.

A type of bar chart that illustrates a project schedule, showing the start and finish dates of the terminal elements and summary elements of a project.

The process of organizing, planning, and managing time and resources effectively to complete a construction project within a defined timeline.