Plain-language definitions of every term your estimator, architect, or contractor might use — and a few they probably should explain but won't.
A
Allowance
A sum included in an estimate for work that has not yet been fully designed or specified. Allowances are flagged clearly and replaced with actual costs as design develops.
Alternates
Optional scope items priced separately from the base bid. Owners use alternates to add or deduct scope after bids are received, without rebidding the project.
AOR (Architect of Record)
The licensed architect legally responsible for a set of construction documents. In design-build projects, the AOR may be the same firm producing the estimate.
B
Bid Levelling
The process of comparing subcontractor bids side-by-side, adjusting for inclusions and exclusions, to produce an apples-to-apples comparison. A levelled bid tab is the output.
Buyout
The process of selecting and contracting subcontractors after a project is awarded to a GC. The gap between the estimate and the final buyout cost is the buyout savings or loss.
C
Change Order
A written amendment to a construction contract that modifies scope, price, or schedule. Good estimating reduces change orders by anticipating ambiguity in the documents.
Conceptual Estimate
An early-stage estimate based on minimal information — often just square footage and building type. Accuracy is typically ±20–30%. Used for feasibility and go/no-go decisions.
Contingency
A percentage or lump sum added to an estimate to cover unknowns. Design contingency (15–25%) covers incomplete drawings; construction contingency (5–10%) covers field conditions.
CSI MasterFormat
The Construction Specifications Institute's standard numbering system for organising construction documents and estimates into divisions (01–49). Industry standard in North America.
D
Design-Build
A project delivery method where design and construction are contracted to a single entity. Estimating starts earlier and runs in parallel with design — reducing the gap between estimate and reality.
E
Escalation
An adjustment to an estimate to account for anticipated cost increases over time. Critical on projects with long lead times between estimate and construction.
G
GMP (Guaranteed Maximum Price)
A contract type where the contractor agrees to complete the project for no more than a stated maximum. Requires a thorough estimate — the GC bears cost overruns above the GMP.
H
Hard Cost
The direct cost of construction: materials, labour, equipment, and subcontractor work. Excludes soft costs (design fees, permits, financing).
L
Line Item
A single row in an estimate representing a specific scope of work, with quantity, unit of measure, unit cost, and extended total.
M
MEP
Mechanical, Electrical, and Plumbing — the three major building systems. MEP typically represents 25–40% of commercial construction cost.
Mobilisation
The cost of moving equipment, personnel, and temporary facilities to a job site at the start of a project. Usually captured in Division 01 (General Requirements).
O
Owner's Contingency
A budget reserve held by the project owner (not the contractor) for unforeseen scope additions or owner-directed changes.
P
Preliminary Estimate
A mid-design estimate with more detail than conceptual but less than a final bid estimate. Accuracy typically ±10–15%.
Q
Quantity Takeoff
The process of measuring and counting materials and labour from drawings. The foundation of every estimate — garbage in, garbage out.
R
RSMeans
A widely used cost database providing unit costs for thousands of construction items by region and year. We use RSMeans as a cross-check, not a crutch.
S
Soft Cost
Project costs outside of direct construction: design fees, permits, surveys, financing, legal, marketing. Typically 15–25% of total project cost on commercial work.
Subguard
Subcontractor default insurance — protects the GC if a sub fails to perform. Cost is typically included in the GC's general conditions or fee.
T
Trade Breakdown
An estimate organised by construction trade (concrete, framing, mechanical, etc.) rather than by CSI division. Common for fast-track or design-build projects.
V
Value Engineering (VE)
A systematic process for reducing project cost without reducing required function. True VE identifies equivalent alternatives — not just cheaper materials.
Variance
The difference between the estimate and the actual bid or final cost, expressed as a percentage. Variance depends on the completeness of drawings, scope definition, and market conditions at the time of bidding.