The following is a glossary of terms relating to construction cost estimating. __NOTOC__
A Allocation of costs is the transfer of costs from one cost item to one or more other cost items. Allowance - a value in an estimate to cover the cost of known but not yet fully defined work. As-sold estimate - the estimate which matches the agreed items and price for the project scope.
B Basis of estimate (BOE) - a document which describes the scope basis, pricing basis, methods, qualifications, assumptions, inclusions, and exclusions. Bill of materials (BOM) - a list of materials required for the construction of a project or part of a project, which may include quantities. Bill of quantities (BOQ) - a document used in tendering in the construction industry in which materials, parts, and labor (and their costs) are itemized. It also (ideally) details the terms and conditions of the construction or repair contract and itemises all work to enable a contractor to price the work for which he or she is bidding. Bond - usually refers to a performance bond, which is a surety bond issued by an insurance company or a bank to guarantee satisfactory completion of a project by a contractor. Other types of guarantees, such as a bid bond or a materials bond, are sometimes also required by a project owner.
C Chart of accounts (Code of accounts) (COA) - a created list of the accounts used by a business entity to define each class of items for which money or the equivalent is spent or received. It is used to organize the finances of the entity and to segregate expenditures, revenue, assets and liabilities in order to give interested parties a better understanding of the financial health of the entity. City cost index - see: Location cost index. RSMeans publishes a city cost index table. Construction is a process that consists of the creation, modification, or demolition of facilities, buildings, civil and monumental works, and infrastructure. Construction cost - the total cost to construct a project. This value usually does not include the preplanning, site or right of way acquisition, or design costs, and may not include start-up and commissioning costs. This total or subtotal is usually identified as such in an estimate report. Also known as Total Estimated Contract Cost (TECC). Consumables are goods that, according to the 1913 edition of Webster's Dictionary, are capable of being consumed; that may be destroyed, dissipated, wasted, or spent (also known as consumable goods, nondurable goods, or soft goods). In construction, these may include such materials as weld rod, fasteners, tape, glue, etc. Contingency - When estimating the cost for a project, product or other item or investment, there is always uncertainty as to the precise content of all items in the estimate, how work will be performed, what work conditions will be like when the project is executed and so on. These uncertainties are risks to the project. Some refer to these risks as "known-unknowns" because the estimator is aware of them, and based on past experience, can even estimate their probable costs. The estimated costs of the known-unknowns is referred to by cost estimators as cost contingency. Cost - the value of currency required to obtain a product or service, to expend labor and use equipment and tools, or to operate a business. Cost index (or factor) - a value used to adjust the cost of from one time to another. There are various published cost indexes, listed by year, quarter, or month. RSMeans publishes a historical cost index. Costing - the process of applying appropriate costs to the line items after the take off. RSMeans refers to this as "Price the quantities." May also be called pricing. Crew – a group of people (workers) who execute a construction activity. The crew may also include construction equipment required to execute the work. Crew hour (ch) – one crew's effort for one hour of time.
D Deliverable is a term used in project management to describe a tangible or intangible object produced as a result of the project that is intended to be delivered to a customer (either internal or external). Direct costs are directly attributable to the cost object. In construction, the costs of materials, labor, equipment, etc., and all directly involved efforts or expenses for the cost object are direct costs. Distributables – a classification of project costs which are not associated with any specific direct account. Duration – the amount of clock or calendar time which is required to execute a work activity or task.
E Effort - the work done in accomplishing a task or project. May be a measurement of the hours required. Equipment - (1) a category of cost for organizing and summarizing costs, (2) construction equipment used to execute the project work, (3) engineered equipment such as pumps or tanks. Escalation is defined as changes in the cost or price of specific goods or services in a given economy over a period. In estimates, escalation is an allowance to provide for the anticipated escalation of costs during construction. Estimation in project management is the processes of making cost estimates using the appropriate techniques.
F Facility - an installation, contrivance, or other thing which facilitates something; a place for doing something. A building, plant, road, reservoir, etc. Field Supervision (or field non-manual) - supervisory personnel and all other non-manual staff at the construction site. Foreman - the worker or tradesman who is in charge of a construction crew. The foreman may be a hands-on worker who contributes to the work completion or a non-working foreman. A general foreman may be in charge of all or some crews. Fringe Benefits - labor cost elements which are provided to pay for benefits received by workers, such as health insurance, pension, training, etc.
G General & Administrative Costs (G&A) - the costs of operating a construction business. These costs include such things as office space, office staff, operating facilities, etc. They are not associated with any specific project, but may be allocated across projects in a cost estimate. See also Overhead, Indirect cost. General contractor is responsible for the day-to-day oversight of a construction site, management of vendors and trades, and communication of information to involved parties throughout the course of a building project. General requirements - costs for general requirements (Division 1) of the project execution which are actually part of the deliverable. Examples: project management & coordination 47, temporary facilities & controls, cleaning & waste management, commissioning.
I Indirect costs are costs that are not directly accountable to a cost object (such as a particular project, facility, function or product). See also, Overhead, General & Administrative Cost, Distributable.
L Labor – a category of cost which is incurred to employ people (workers, crafts, trades, etc.) in the execution of construction work activity. Labor benefits are additional costs (such as holiday pay or health insurance) which the employer pays directly to the employee or into a fund on behalf of the employee. Labor burden is the cost of payroll taxes and insurances (such as workers' compensation) which the employer must pay to employ workers. Labor rate (sometimes price) – the amount of currency per unit of time which is required to employ people (workers, crafts, trades, etc.) in the execution of construction work activity. The rate may represent the wage rate only, or may include various benefits and labor burdens. Line item - one element of cost in an estimate which is listed in the estimate spreadsheet. Location cost index (or factor) - the ratio of the cost in one location to that in another location. These may include or exclude currency exchange rates. Example: 223 in Boston / 187 in Austin = 1.19. The location cost factor is used to adjust the cost from one location to another. To adjust a known cost in Austin to that in Boston, multiply the Austin cost by 1.19. See also City cost index. Lump sum – "the complete in-place cost of a system, a subsystem, a particular item, or an entire project."
M Man-hour (mh) – one person's (worker, craftsman, tradesman, etc.) effort for one hour of time. Note: some attempt to make this gender neutral by renaming this as work hour or job hour or person hour, or something similar. Man-hour norms - a set of standard man-hour rates for work tasks, given normal working conditions. Man-hour rate – the amount of man-hours which are consumed executing one unit of work activity. Man-hour rate = man-hours required for work / completed work quantity. Example: Excavation 0.125 mh/cy. The man-hour rate is related to the inverse of the production rate times the number of workers in the crew performing the work. Example: Excavation at 8 cy/day (8-hour day) with 2-man crew = 2 x 8 / 8 = 2 man-hours/cy. See also Production rate. Note: some sources call this Productivity, an unnecessary confusion. Mark-up is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit. Manual labor is physical work done by people involved in construction the project. All of the various trade workers are included in manual labor, including foremen. Means & methods - the means and methods used in executing the work.
N Non-manual labor - work done by people who are not classified as manual labor. Non-productive time - work time which is paid but does not contribute to the production of work. Examples: safety meeting, travel time, clean up time, wash up time, etc.
O Open shop is a place of employment at which one is not required to join or financially support a union (closed shop) as a condition of hiring or continued employment. Open shop is also known as a merit shop. Overhead - In business, overhead or overhead expense refers to an ongoing expense of operating a business; it is also known as an "operating expense". See also General & Administrative Cost, Indirect Cost. Overtime is the amount of time someone works beyond normal working hours: see also Premium pay.
P Per diem - a daily allowance for expenses, a specific amount of money that an organization gives an individual per day to cover living and traveling expenses (allowance) in connection with work done away from home or on tour. (Latin for "per day" or "for each day") Plug number - a value inserted in an estimate as a place holder and an approximation of the cost for a scope element which has not been detailed yet. See also Allowance. Premium pay - the extra portion of wages paid when a worker works overtime. Example: Wage rate is 10.00/hour, overtime is paid at time and a half, or 15.00/hour, the premium pay is 5.00/hour. Price is the quantity of payment or compensation given by one party to another in return for goods or services. Pricing is the function of determining the amount of money asked in consideration for undertaking the project. Depending on the market and profit considerations, etc., the price may be more or less than the cost. Production rate – the quantity of work which is completed in one unit of time. Production rate = completed work quantity / duration. Example: Excavation 8 cy/day = 1 cy/hour (in an 8-hour day). RSMeans lists this as Daily Output. See also Man-hour rate. Note: some sources use the term productivity for the production rate or man-hour rate, an unnecessary confusion.