Construction terms, defined plainly

Holdback

Also: Construction holdback · Lien holdback · Retainage (US)

A holdback is a portion of each progress payment that an owner is required to retain for a set period, protecting against liens from unpaid subcontractors and suppliers.

Progress billing

Also: Progress claim · Progress draw · Partial billing

Progress billing is invoicing for the portion of a contract completed so far, rather than issuing one invoice when the job ends.

Construction draw

Also: Bank draw · Draw request · Construction loan draw

A construction draw is a scheduled release of funds from a construction loan, paid after the lender verifies that the corresponding stage of work is complete.

Schedule of values

Also: SOV · SOV in construction

A schedule of values breaks the total contract price into line items with a dollar value each, so progress can be billed against the parts of the work actually completed.

Substantial performance

Also: Substantial completion · Substantial performance of the contract

Substantial performance is the point at which a project is sufficiently complete to be used for its intended purpose, even though minor work or deficiencies remain.

Deficiency list

Also: Punch list (US) · Snag list (UK) · Deficiency report

A deficiency list records the outstanding or defective items identified near the end of a project that must be corrected before the work is accepted as complete.

Change order

Also: Variation · Contract change · CO

A change order is a written, agreed amendment to the contract scope, price or schedule, signed before the changed work is carried out.

Construction contingency

Also: Contingency allowance · Contingency budget

A construction contingency is a sum set aside in the budget for costs that are expected to arise but cannot be identified in advance.

Pay application

Also: Pay app · Application for payment · Progress claim (Canada)

A pay application is the formal request a contractor submits to be paid for work completed in a billing period, supported by documentation the owner or lender verifies before releasing funds.

RFI

Also: Request for information · RFIs in construction

An RFI, or request for information, is a formal written question from the contractor to the design team asking for clarification the drawings or specifications do not provide.

QA/QC

Also: Quality assurance and quality control · QA vs QC

Quality assurance is the process designed to prevent defects; quality control is the inspection that catches the ones that happen anyway.

Shop drawings

Also: Fabrication drawings · Submittal drawings

Shop drawings are detailed fabrication and installation drawings produced by a contractor, supplier or fabricator, showing exactly how a specified element will be made and installed.

Lien waiver

Also: Waiver of lien · Statutory declaration (Canada)

A lien waiver is a signed document in which a contractor, subcontractor or supplier gives up the right to place a lien on a property for work or materials already paid for.