Glossary of Construction Terms and Definitions


Note: This document is reference material for companies interested in working throughout the bidding process until completion of construction on private and public commercial properties.


This document is intended to serve as a glossary of terminology applicable to the North American building construction industry. It will facilitate consistency in describing the requirements of bidding and in progress to the closeout phase of construction. It is also a resource for researchers who conduct analysis on the construction process and lingo.

The organization of this document is primarily alphabetical. Acronyms are grouped at the beginning of each alphabetical section, and are followed by words, terms and phrases. Acronyms are expanded at the beginning of each alphabetical section and defined with the full term or phrase. 

- A -

ANE. Annual Number of Employees

Accident investigation program. It provides employees with information and guidelines that will assist them in recognizing, preventing, reporting, and investigating incidents, conditions, behaviors, hazards, and root causes.

Annual Number of Employees. Add the total number of employees your establishment paid in all pay periods during the year,” and divide that by “the number of pay periods your establishment had during the year

Apprentice Program. Apprentice Program typically hosted by individual construction companies, or through construction associations such as Associated Builders and Contractors (ABC) or The Associated General Contractors of America (AGC).  Trades that might be taught through an apprenticeship include carpentry, masonry, plumbing and welding.

Auto insurance limit. $1 million is recommended per each occurance, plus Any Auto coverage is priority over Owned Autos Only, or Hired Autos Only, Scheduled Autos, or Non-Owned Autos Only.

- B -

Backlog. the amount of work, measured in dollars, that construction companies are contracted to do in the future. Can be an indicator of a company’s financial health

Bank debt.  a long-term liability a business takes on by borrowing money from its bank.

Bankruptcy.  Mostly a Yes or No question in subcontractor applications, did your business declare bankruptcy? 

Bid Opening. Stage in project advertisement process where sealed bids, received by prospective bidders (Contractors) are opened and examined by the general contractor.

Bidder. An individual, partnership, firm, corporation, or joint venture, submitting a proposal or bid.

Bond capacity.  The maximum amount of coverage a surety will provide to a company. Through investigating the financial standing, experience, and business practices of the company and its owners determines the capacity.

Bonding Agent company.  an insurance agency where businesses go to get a surety bond

Break Ground. Start a construction project when the contractor starts to clear the dirt to begin levelling in preparation to construct a building.  The GC has mobilized.  

Business license.  a mandatory approval or permit issued by a government agency that authorizes a business to operate within a specific jurisdiction. This license is often an additional requirement beyond the registration of a business at the state level.

- C -

COI- Certificate of Insurance

CSI– Construction Specifications Institute

Certificate of Insurance. , is a one pager that provides policy details on your liability insurance coverage, verifying that you have the business insurance. It summarizes essential information like the types and limits of coverage, the issuing insurance company, your policy number, insurance limits, the named insured, and the policy’s effective and expiration dates.

Certificate of Occupancy: The building is complete, written confirmation issued by the Bureau of Buildings stating that the building, or a specific space within a building, is deemed to be in compliance with the requirements of building codes, zoning codes, and other City Ordinances.

Completion Date: The day all the work specified in the contract is completed and all the obligations of the Contractor under the contract are fulfilled. All documentation required by the contract and required by law must be furnished by the General Contractor to the County Building Department before establishment of the Completion Date.

Contract Ad Date: The date the project is advertised for bid.

Contract Award: The time at which the advertised project is awarded to the lowest responsible bidder.

Construction Specifications Institute. The “Dewey Decimal System” of construction, is the guiding numbering system to create consistency and organization across the industry.  Division 01 — General Requirement, Division 02 — Site Construction,  Division 03 — Concrete,  Division 04 — Masonry, Division 05 — Metals,  Division 06 — Wood and Plastics,  Division 07 — Thermal and Moisture Protection,  Division 08 — Doors and Windows,  Division 09 — Finishes,  Division 10 — Specialties,  Division 11 — Equipment,  Division 12 — Furnishings,  Division 13 — Special Construction,  Division 14 — Conveying Systems,  Division 15 — Mechanical/Plumbing,  Division 16 — Electrical,  Division 17 — Other – All MasterFormat related specifications nonconforming to the above CSI sections

Contractor License Number.  A unique combo of letters and numbers issued by a state licensing board to Commercial Contractors for the following trades: Electrical, HVAC, and Plumbing. 

Contractor Score.  Scores range from zero, the lowest, to 2500, the highest, and are used by commercial construction industry partners and customers to assess a potential partner’s business sustainability.

Company executive. An owner of the company (only if the company is a sole proprietorship or partnership);An officer of the corporation; The highest ranking company official working at the establishment; or The immediate supervisor of the highest ranking company official working at the establishment.

 Credit Reference.  Each individual account listed on your credit report.  from any entity that is able to speak to your creditworthiness, so it could be your credit card company, a utility or telephone company.

Criminal Investigation. 

Normally a yes or no question on subcontractor applications.  Includes searching, interviews, interrogations, and evidence collection in regards to your company breaking laws.

- D -

DART. Days Away, Restricted or Transferred

DBE.  Diversity Business Enterprise

Duns. Dun and Bradstreet

DART Rate.  An OSHA calculation that determines how safe your business has been in a calendar year in reference to particular types of workers’ compensation injuries

Diversity Status.   A business at least 51% owned by members of a diversity group.  Small business, small disadvantaged business (minority), woman-owned business, service-disabled veteran-owned businesses, HUBZone small businesses (SBA program).  The business has to be owned and controlled by ethnic minorities or women. 

Duns number.   A nine-digit, unique number free of charge to a valid business entity based on their legal business name and physical location.  You can request a number at

- E -

EEO. Equal Employment Opportunity

EIN. Federal Tax ID.  Entity Identification Number

EMR. Employee Modification Rate

EMR Ratings.  Is used to price workers’ compensation insurance premiums.  In construction, insurance companies use an organization’s EMR to gauge the past cost of injuries and future chances of risk.  The most common EMR is 1.0. If your EMR dips below 1.0, your company is considered safer than most, which translates to lower premiums.

Employment Orientation.  A process of introducing newly hired employees to their new workplace.  Do you make employees aware of company policies and expectations

Entity Type. Sole Proprietor /Individual, limited liability company (LLC), Partnership, corporation, S-Corporation.  Choose an entity type for your business at

Equal Employment Opportunity.   The law is to prohibit specific types of job discrimination in certain workplaces including Private Employers, State and Local Governments, Educational Institutions, Employment Agencies and Labor Organizations

E-Verify.  A web-based system that allows enrolled employers to confirm the eligibility of their employees to work in the United States.

Excess limit. The highest amount of insurance that will be offered in a given situation in excess of basic limits.

- F -

Fabrication Capability.  Can your company process Stamping, Die casting, Machining, Forging, Waterjet cutting, and Welding to name oof the few capabilities. 

Field safety & health inspections.  Most companies conduct periodic work site safety inspections. This process is part of injury prevention efforts.

Fixed asset value.  Appears in the financial records and can include buildings, computer equipment, software, furniture, land, machinery, and vehicles.

Founded Business.  The year in which the business starts is the first tax year of the business.

- G -

GL. General Liability Insurance

General Aggregate.  The most money an insurer can pay to a policyholder during a specified period. These limits are contained in the contracts of commercial general liability (CGL) and professional general liability insurance policies.

General Liability Insurance.  Protect your LLC if someone is injured on your business’s property, and it covers damage caused by you or your employees.

- H -

Hazard Communication Program.  Increase employee awareness of hazardous chemicals used in the workplace so that they can recognize known and potential hazards and take proactive measures to minimize harm to themselves, others, and the environment.

- I -

ITB. Invitation to Bid

Incorporation Date.  The date the articles are filed is known as the date of incorporation. This information is then made publicly available by the state.

Invitation to Bid. a call to contractors to submit a proposal on a project for a specific product or service. Similar to all other types of bids, an invitation to bid is generally awarded to the contractor who submits the lowest bid.

- J -

- K -

- L -

LTIR. Lost Time incident Rate

Liabilities value.  The sum of all of the money you owe is your liabilities. As you start to pay down your debt, your total liabilities will decrease.

Litigation.  The act or process of settling a dispute in a court of law.

Liquidated Damages.  Are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties.

- M -

MBE. Minority Business Enterprise

Minority Status.The majority (at least 51%) of the company is owned and run on a daily basis by a member of four ethnic or racial groups: African Americans, Asian Americans, Hispanic Americans, and Native Americans.

- N -

NAICS. The North American Industry Classification System 

NTP. Notice To Proceed

Notice To Proceed. Formal notification given to the Contractor that officially begins the project. The monitoring of the number of contract working days begins on this date.

- O -

OSHA: Occupational Safety and Health Administration.   Regional and local offices

Open Shop.   The concept protects an employee’s right to choose between participating in a union, or withholding from a union.  With close shop firms, unions control the supply of labor.

OSHA 300 Logs.  Most employers with 10 or more full-time employees must keep a yearly log of all work-related injuries and illnesses, then  At year end create an annual summary on the OSHA 300 Log .  You will need the company’s name, establishment name, establishment address, annual average number of employees and the total hours worked by all employees covered by the OSHA 300 Log.  You must post a copy of the annual summary in each establishment in a conspicuous place or places where notices to employees are customarily posted.  Create a pdf for electronic sharing. see more here or download the forms.

OSHA citations.  OSHA posts on its web site citations and proposed penalties for inspections conducted since the beginning of OSHA

- P -

Parent Company.  A company that owns more than 50% of the outstanding voting shares of another company. … A parent company typically actively manages its own ventures and makes purchases to aid in its overall operations with its other subsidiaries.

Payment & Performance Bond rate.  A good rule of thumb is that the average cost of a performance bond is around three percent (3%) of the job and it’s determined by the nature of the project and your financial strength.

Physical Completion Date. The day all of the work is physically completed on the total project. All documentation required by the contract and required by law does not necessarily need to be furnished by the Contractor to Pierce County by this date.

Plan Room.  Where construction professionals may view bidding documents (blueprints and specifications) for projects seeking price estimates for specific construction products or services

Pre-Construction Meeting. Meeting held between Contractor, Pierce County Construction engineers, and various Utility Agencies affected by the construction. The meeting serves as an introduction to the project for all parties involved.

Pre Qualification.  Form with questions used to evaluate the qualifications of a subcontractor to perform the specific work for which they are being considered.  

Prevailing wage.  The project is being funded by the state, contractors that work on site must pay State arranged wages and benefits directly to your employee as normal.  submit weekly payroll reports listing who worked and their hours.  the state can audit a company within 3 months from invoicing.

Punch List. A list of minor remaining items to be completed or deficiencies to be corrected prior to granting Physical Completion.

- Q -

- R -

RIR. Recordable Incident Rate
Recordable Incident Rate.  A mathematical calculation used by OSHA that describes the number of employees per 100 full-time employees that have been involved in an OSHA-recordable injury or illness.
Return to work / light duty program. If there is no modified work or light duty available, an injured worker will receive temporary disability benefits for his or her lost wages. An injured worker who is offered but refuses modified work or light duty will not receive temporary disability benefits for the time he or she is not working.

- S -

Scope of work.  The SOW should contain any milestones, reports, deliverables, and end products that are expected to be provided by the performing party. The SOW should also contain a time line for all deliverables.

Size of Business.  The SBA assigns a size standard to each NAICS code. Most manufacturing companies with 500 employees or fewer, and most non-manufacturing businesses with average annual receipts under $7.5 million, will qualify as a small business.–table-size-standards

State Founded.  The location where your business is created.

Subcontractor. An individual, partnership, firm, corporation, or joint venture who is sublet part of the Contract by the contractor.
Substance abuse policy:

Substantial Completion Date. The day the Engineer determines the Contracting Agency (Pierce County) has full and unrestricted use of the project area, both from the operational and safety standpoint, and only minor incidental work or correction of repair remains in order to obtain the physical completion date of the total project.

- T -

Topped out. The roof has been installed, the top is now on the new structure. 33% of the project is complete.  Walls will be installed to close the building in, then interior finishes installed.

Trade.  A subcontractor that specializes in a specific part of a construction project. These parts can range from electrical and plumbing to painting and site preparation.

- U -

Union signatory. The general contractor has agreed to comply with the union guidelines outlined within a specific signatory union agreement. The GC legally binds themselves to follow a union’s rules, hence the rules come down to subcontractors. Subs must be able to pay fringe benefits and wages to the local union also.

- V -

Value of Work Now Under Contract.  A method for measuring and estimating the cost of the project at a specific point in time. This can either be a given point of time, like the actual end of the project, or a forecasted point in time, like the projected end of the project.

- W -

W9. IRS Form W 9

WBE. Women’s Business Enterprise

WIP. Work in progress 

Women’s Business Enterprise.  At least 51 percent owned, controlled, operated, and managed by a woman or women. This means one or more women must have unrestricted control of the business, a demonstrated management of day-to-day operations, and a proportionate investment of capital or expertise.

Workers compensation limit.  For most states the limits are $100,000 per occurrence for bodily injury, $100,000 per employee for bodily injury by disease and a $500,000 policy limit for bodily injury by disease. State fund policies do not provide employers’ liability coverage.

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