Accounts Payable
Money your business owes to suppliers, subcontractors and others for work or materials already received.
Business
Construction has its own language, and the words matter when money and contracts are involved. Here are the terms small residential builders use most, explained in plain English by builders with over 35 years on the job. Search by word, jump by letter, or filter by topic.
Money your business owes to suppliers, subcontractors and others for work or materials already received.
Money clients or lenders owe your business for work you have already billed.
A written change to the bid documents or contract, made before the contract is signed. It becomes part of the final agreement.
A set amount in the contract for items the client hasn't chosen yet, like light fixtures or tile. If the client spends more, they pay the difference.
The extra cost when a client's choice goes over the allowance in the contract. It is usually billed with a change order.
A lender's estimate of what the finished home will be worth. It helps decide how large the construction loan can be.
A licensed professional who designs the building and prepares the drawings used to price and build it.
Drawings updated at the end of the job to show how the home was really built, including all changes.
A cost the builder charges back to a subcontractor for work the builder had to fix or finish for them.
Soil put back around the foundation after it is built and waterproofed.
A price a contractor or subcontractor offers for a defined scope of work.
A bond that guarantees a bidder will sign the contract at the bid price if chosen.
Comparing bids side by side on the same scope, so you compare fair prices and spot missing items.
The drawings, specifications and scope sent to subcontractors so they can price the work.
A list of all materials and quantities needed for a job or a phase of work.
The construction drawings of a building. Most builders now use digital plans, but the name stayed.
The difference between what you estimated a cost would be and what it really cost.
Insurance that protects a building while it is under construction, for example from fire, storms or theft.
The local rules a building must meet for safety, structure, energy use and more.
Official permission from the local government to start building.
A document that proves a contractor or subcontractor has active insurance.
The document from the local building department that says a home is safe and ready to live in.
A written instruction to do changed work before the price or time impact is agreed.
A signed change to the original contract that updates the scope, price or schedule.
The document used to write down a change, its cost and time impact, and get the client's signature.
A running list of every change order on a job, with its status and cost.
The final stage of a job: finishing punch list items, collecting final payments and handing over documents.
The papers handed to the owner at the end of the job, like warranties, manuals, lien releases and as-built drawings.
A lien waiver that only takes effect once the payment has actually been received.
The total planned cost of a build, broken into parts like labor, materials, subcontractors, permits and contingency.
The timing of money coming in and going out on a job. A profitable job can still run short of cash if payments come late.
A short-term loan that pays for building a home in stages, called draws, as the work is completed.
The person who plans, coordinates and oversees the building work.
The document a builder sends a client with the scope, price and terms for a job.
The plan that shows each task, its order and how long it takes, from start to finish.
A loan that pays for the build and then turns into a regular mortgage when the home is finished.
Money set aside in the budget for costs you can't predict.
All the documents that make up the agreement: the contract, drawings, specifications and any addenda.
A code that groups costs by type of work, so you can track spending the same way on every job.
When the real cost of a job or item goes over the budget.
A contract where the client pays the real costs plus an agreed fee or percentage for the builder.
The estimated money still needed to finish the job. Lenders often ask for it with each draw.
The chain of tasks that sets the earliest possible finish date. If one of them slips, the whole job slips.
A builder who builds one-off homes designed for a specific client and lot.
A daily record of the work done, crew on site, weather, deliveries and problems.
A way of delivering a project where one company handles both the design and the construction under one contract.
A payment released from the construction loan for work that has been completed.
The form a builder fills in to request a draw from the lender, listing the work completed and the amount due.
A site visit by the lender's inspector to confirm the work claimed in a draw request is really done.
The request a builder sends the lender to release loan money for work completed.
The agreed plan of when loan money is released and how much, tied to stages of the build.
The stage when the home is closed to the weather: the roof, windows and exterior doors are in.
Gypsum panels used to make interior walls and ceilings.
A legal right for someone else, like a utility company, to use part of a property.
A drawing that shows one side of the building as if you were looking straight at it.
A calculated forecast of what a job will cost to build.
The person who prepares cost estimates and bids.
Digging and removing soil to prepare the site for the foundation.
The last payment released from the construction loan, usually after the final inspection.
The last inspection by the building department before the certificate of occupancy is issued.
The last visit with the client to check the finished home and list anything left to fix.
A contract with one agreed price for the full scope of work. Also called a lump sum contract.
A drawing that shows the layout of rooms, walls, doors and windows from above.
The wide base under a foundation wall that spreads the building's weight into the soil.
The part of the building that carries its weight down into the ground.
Building the skeleton of the house: the walls, floors and roof structure.
Job costs that aren't tied to one trade, like site supervision, temporary power, portable toilets and dumpsters.
The company responsible for building the project, hiring subcontractors and managing the job.
Shaping the ground so water flows away from the home.
The share of the selling price left after direct job costs. It has to cover overhead and profit.
A contract where the builder is paid costs plus a fee, but the total can't go over an agreed maximum.
The direct costs of building: labor, materials and equipment.
Another word for retainage: part of a payment held back until the work is finished.
A local or state trade group that supports home builders with training, networking and advocacy.
Heating, ventilation and air conditioning systems.
A check by the building department or the lender that work meets code or is complete.
Material that slows the loss and gain of heat through walls, floors and roofs.
Money set aside in a construction loan to pay the interest while the home is being built.
A bill for work done or materials supplied.
Tracking the real costs of each job against its estimate.
The place where the construction work happens.
A horizontal beam that supports a floor or ceiling.
The first meeting of the project team to agree on how the job will start and run.
The extra cost of an employee on top of wages, like payroll taxes, insurance and benefits.
How long it takes from ordering an item until it arrives on site.
The bank or credit union that provides the construction loan and releases the draws.
A legal claim on a property until a debt is paid.
A document confirming that a lien has been removed or a payment claim has been settled.
A document where a contractor or supplier gives up the right to file a lien for a payment.
An amount agreed in the contract that is owed for each day the job finishes late.
A wall that carries weight from above, like floors or the roof. Removing it needs a structural solution.
The piece of land a home is built on.
A contract with one total price for the whole scope of work.
The share of the selling price that is profit. It is not the same as markup.
The percentage added on top of your costs to get the selling price.
A list of the materials and quantities measured from the plans.
A lien filed by a contractor, subcontractor or supplier who wasn't paid for work on a property. Rules vary by state.
A key point in the schedule, like foundation complete or dry-in.
Moving people, equipment and supplies to the site to start work.
The builder's promise to fix certain defects for a set time after a new home is finished.
A document filed in some states that records when work starts on a property. It matters for lien rights.
A written notice from the owner that tells the contractor to start work.
Business costs not tied to one job, like office rent, trucks, software and office staff.
The person or company paying for the project. In home building, usually the homeowner.
A formal request for payment that shows the work completed to date. Common on larger jobs.
A bond that guarantees subcontractors and suppliers will be paid.
The agreed plan of when the client pays and how much.
How much of a job is finished, shown as a percent. Used for billing and draws.
A bond that guarantees the contractor will finish the job as agreed in the contract.
Official approval from the local government to do specific work.
The drawings and written requirements that describe what will be built.
Everything done before building starts: design, estimating, permits, scheduling and contracts.
A meeting before work starts to agree on scope, schedule, roles and site rules.
A builder who builds many similar homes from a set of standard plans.
Billing the client in stages as work is completed.
A payment made during the job for the work completed so far.
A list of small items to fix or finish before the job is complete.
A document that orders materials or work at an agreed price.
A fixed price offered for specific materials or work.
Changing or updating an existing home.
A written question to the designer or owner to clear up something unclear in the plans.
Part of each payment held back until the job is finished, to make sure the work gets completed.
The stage when plumbing, electrical and HVAC lines are installed inside open walls, before drywall.
A list that breaks the contract price into parts of the work. It is used to measure progress and bill draws.
When the work slowly grows beyond the original agreement without formal changes.
The written description of exactly what work is included in a job.
The finishes and products the client chooses, like flooring, cabinets and fixtures.
A document that lists the client's choices of finishes and materials.
The minimum distance a building must be from the property line, set by local zoning.
A drawing of the lot that shows where the home, driveway and utilities go.
Preparing the land for building: clearing, grading, excavation and utilities.
Costs that aren't labor or materials, like design, permits, fees, insurance and loan interest.
A test of the ground to check it can safely carry the foundation.
A home built before there is a buyer, to be sold once it's done.
The written requirements for materials, products and quality of work on a job.
A document with the details of a product or material, like size, model and finish.
A summary of what has been billed, paid and is still owed on a job.
A company or tradesperson hired by the builder to do one part of the work.
The point where the home is finished enough to be used, even if small items remain.
The person who runs the job site day to day: crews, schedule, quality and safety.
A company that sells materials for the job.
A guarantee from a surety company to the owner that the contractor will meet its duties.
A measured drawing of the lot that shows its boundaries and features.
Measuring the plans to count the materials and quantities needed for an estimate.
A contract where the client pays for hours worked and materials used, at agreed rates.
A title check before a draw, to confirm no new liens were filed on the property.
A specific type of construction work, like plumbing, electrical or framing.
A home delivered complete and ready to move in.
A check made out to two names, like the builder and a supplier, so both must sign to cash it.
A lien waiver that takes effect right away, whether or not the payment has cleared.
A contract that pays a set price per unit of work, like per square foot or per item.
A better finish or product than the standard one in the contract, usually at extra cost.
Finding ways to lower the cost without losing function or quality.
Permission to build in a way that doesn't follow a zoning rule.
A visit to the site to review the work with the client, a subcontractor or an inspector.
The time after completion during which the builder fixes covered defects.
A work-in-progress report that shows how each open job is doing: billed, spent and still to go.
Insurance that covers workers who get hurt on the job.
A written task given to a crew or subcontractor.
Local rules that control how land can be used and what can be built on it.
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