Construction law glossary of terms

Acceleration Order

A written direction given by the owner or principal to accelerate or re-sequence the being performed by the contractor under the contract

ASME (American Society of Mechanical Engineers)

A not-for-profit professional organization for engineers.

As-Built Drawings

Drawings, records, documents, and other information that reflect the actual conditions of a project as it was constructed.

Approved for Construction or Issued for Construction (IFC)

Documents, such as drawings and specifications, that have been reviewed and approved for use in construction.

Asset Register

A comprehensive list of all assets associated with a project, including details such as location, condition, and maintenance history.

Baseline

The approved version of a project schedule used as a reference for measuring project performance.

BoQ (Bill of Quantities)

A document listing the quantities and cost of materials and labour for a construction project.

BoM (Bill of Materials)

A comprehensive list of materials, components, and assemblies required to construct a project.

CAPEX (Capital Expenditure)

Funds used to acquire or upgrade physical assets.

Certificate of Practical Completion

A written certificate which states that the constructed facility has achieved all the requirements in the contract at the date of practical completion.

Change Order

A formal document that modifies the original contract terms, scope, or price.

Claim

Any actual or potential legal demand, action, or proceedings

Commissioning

The process of testing and verifying that all systems and components of a project are designed, installed, and functioning as intended.

Compensation Event

Any of a number of events that may give rise to the ability for the contractor to claim compensation from the principal or owner.

CPM (Critical Path Method)

A project management technique used to determine the sequence of tasks that directly impact the project completion date.

Defect

Any trait of the work (goods and / or services) which does not comply with the specifications of the contract.

Defect Liability Period

A period following the completion of a project during which the contractor is responsible for correcting any defects.

Design Life

The time for which a part or product is designed to work as it is specified or assumed to be able to work.

Dispute

Any difference or disagreement between parties that is either wholly or partly unresolved.

Drawing Register

A document that lists all the drawings for a project, including their status and revision history.

Due Diligence

The process of investigating and evaluating a project or investment to confirm all facts and assess potential risks.

Estimate at Completion

The expected total cost of a project when it is complete.

EPC (Engineering, Procurement, and Construction)

A form of contracting arrangement where the contractor is responsible for all activities from design, procurement, and construction to commissioning and handover.

EPCM (Engineering, Procurement, and Construction Management)

A form of contracting arrangement where the contractor provides management services for the design, procurement, and construction phases.

EVM (Earned Value Management)

A project management methodology that measures project performance and progress in terms of scope, time, and cost.

Excepted Risks

A risk for which the contractor is not responsible for.

Extra Work

Additional work that is outside the original contract scope.

Final Acceptance Certificate

A document issued at the end of a project indicating that all contractual obligations have been met.

FEED (Front End Engineering Design)

A design phase that focuses on technical requirements and rough investment costs.

FIDIC (International Federation of Consulting Engineers)

An organisation that provides standard suit of contract templates for projects.

FOB (Free on Board)

A trade term indicating that the seller delivers goods to a ship at a specified port and the buyer pays for shipping and insurance.

FM Events (Force Majeure Events)

An event for which a party affected by the event cannot be held responsible.

Gantt Chart

A visual project management tool that outlines the project schedule, showing tasks, durations, and dependencies.

Guaranteed Maximum Price

A contract type where the contractor is compensated for actual costs incurred plus a fixed fee, up to a maximum price.

Greenfield Project

A project built on undeveloped land, where no previous construction exists.

HSE (Health, Safety, and Environment)

Practices aimed at ensuring the health and safety of employees and the environment.

HVAC (Heating, Ventilation, and Air Conditioning)

Systems providing heating, cooling, and ventilation to buildings.

Handover

The formal transfer of a project or asset from the contractor to the client.

Hold Point

A point in the project where work cannot proceed until an inspection or approval is completed.

IFC (Issued for Construction)

Drawings or documents issued to the construction team for use in building the project.

INCOTERMS

A shorthand for the ICC Official Rules for the Interpretation of Trade Terms – Incoterms 2010 published by the International Chamber of Commerce.

Inspection Test Plan (ITP)

A document detailing the inspection and testing requirements for a project.

ITT (Invitation to Tender)

A formal request for suppliers to submit a bid to provide goods or services.

JSA (Job Safety Analysis)

A process to identify hazards and develop safe procedures for each task in a project.

(KoM) Kick-off Meeting

An initial meeting where project stakeholders discuss the project objectives, scope, and plan.

KPI (Key Performance Indicator)

A measurable value that demonstrates how effectively a project is achieving key objectives.

Latent Defect

A defect not reasonably capable of being discovered by the principal through normal use and maintenance of the work.

LOI (Letter of Intent)

A document indicating the intention to enter into a formal agreement.

Lead Time

The time between the initiation and completion of a process.

Life Cycle Costing

A process of evaluating the total cost of ownership of a project or asset, including initial, operating, and disposal costs.

Long-Lead Items

Materials or equipment with long procurement times that require early ordering.

Lump Sum Contract

A contract in which the contractor agrees to complete a project for a fixed price.

M&E (Mechanical and Electrical)

Components and systems related to mechanical and electrical engineering in a project.

MoC (Management of Change)

A process for managing changes in a project to ensure they are evaluated, approved, and implemented safely.

MSDS (Material Safety Data Sheet)

A document that provides information on the properties of hazardous chemicals and how to handle them safely.

Mobilisation

The process of assembling and preparing the necessary resources to start a project.

NDA (Non-Disclosure Agreement):

A legal contract protecting confidential information from being disclosed.

NTP (Notice to Proceed)

A formal document authorizing the contractor to begin work on a project.

NDE (Non-Destructive Examination)

A testing process that evaluates the properties of a material, component, or system without causing damage.

O&M (Operation and Maintenance)

Activities required to operate and maintain a project or asset after it is completed.

Owner's Engineer

A representative of the project owner who oversees the contractor's work and ensures it meets the contract requirements.

P&ID (Piping and Instrumentation Diagram)

A detailed diagram showing the piping and related components of a process system.

Project Coordinator

A person responsible for coordinating project activities and ensuring they are completed on time.

PDS (Piping Design Specification)

A document specifying the design requirements for piping systems.

PPR (Principal’s Project Requirements)

The written outline of a principal’s requirements for the work for which they have entered an agreement with a contractor

Progress Report

A report documenting the progress of a project

Purchase Requisition

A document requesting materials needed for a project.

Punch List

A list of the outstanding work and defects yet to be completed at the date of practical completion.

QA/QC (Quality Assurance/Quality Control)

Practices aimed at ensuring the quality of materials and workmanship in a project.

RACI Matrix

A chart used to define roles and responsibilities in a project, indicating who is Responsible, Accountable, Consulted, and Informed.

Red Line Mark Ups

The draft as built documents.

RFP (Request for Proposal)

A formal request for suppliers to submit a proposal to provide goods or services.

RFQ (Request for Quotation)

A formal request for suppliers to submit a quotation to provide goods or services.

RFI (Request for Information)

A formal request from a contractor to the client or engineer for clarification or additional information about project details.

S-Curve

A graphical representation of cumulative project data, such as cost or progress, over time.

Schedule of Values

A document outlining the amount allocated to each work item in a project.

Scope Creep

The gradual expansion of project scope beyond its original objectives.

Scope of Work (SOW)

A detailed description of the work required for a project, including deliverables, timelines, and tasks.

Serial Defect

Multiple occurrences of the same defect in the work with a common cause. 

Shop Drawings

Detailed drawings prepared by contractors, suppliers, or fabricators showing how specific portions of the work will be fabricated or installed.

Testing and Commissioning

The process of verifying that all systems and components are functioning as intended.

Take-off

The process of measuring materials and quantities from drawings to prepare a cost estimate.

Time and Materials Contract

A contract type where the contractor is paid for actual time spent and materials used.

TOC (Total Operating Cost)

The total cost associated with operating and maintaining a project or asset.

Turnkey Project

A project where the contractor delivers a fully operational facility to the owner, ready for immediate use.

UoM (Unit of Measure)

A standard unit used to quantify materials or services.

Value Engineering

A systematic method to improve the value of a project by analysing its functions and identifying cost-saving opportunities.

Variation

An addition, omission, substitution or change to the scope of or requirements for the project or work set out in an agreement

VO (Variation Order)

A formal document that modifies the original contract terms, scope, or price.

Vendor Data

Information and documentation provided by suppliers regarding their products or services.

WBS (Work Breakdown Structure)

A hierarchical decomposition of the total scope of work to accomplish project objectives.

Work Package

A group of related tasks within a project that can be assigned to a specific team or contractor.

Warranty Period

A period during which the contractor is responsible for repairing or replacing defective work.

Zero Punch List

A project goal where all punch list items are resolved before project completion.