Construction finance glossary

A

Actual cost (AC)

What the work performed so far has cost, from the job cost ledger. Read the guide →

AI takeoff

Software that detects, counts and measures quantities from construction drawings using computer vision, for an estimator to review. Read the guide →

AIA G702

The Application and Certificate for Payment: a nine-line summary of a progress billing, ending in the current payment due. Read the guide →

AIA G703

The continuation sheet to the G702, listing each schedule-of-values line with work completed to date. Read the guide →

Allowance

A budget amount in a contract for an item the buyer has not chosen yet; a selection over it is billed as a change order. Read the guide →

Annual construction volume (ACV) pricing

Software priced on the construction volume a company runs rather than per user. Read the guide →

B

Backlog

Contracted work not yet performed — contract value less revenue earned. Read the guide →

Bid leveling

Adjusting subcontractor bids to the same scope so they can be compared fairly. Read the guide →

Budget at completion (BAC)

The total budgeted cost of the job. Read the guide →

Buyout

Awarding the subcontracts and purchase orders an estimate assumed; buyout variance compares each awarded scope's budget with its committed value. Read the guide →

C

Change order (CO)

A signed amendment to the contract sum or time. Read the guide →

Change order request (COR)

A priced request sent to the owner for a change in scope. Read the guide →

Committed cost

The total of signed subcontracts, issued purchase orders and approved change orders on them — money agreed, whether or not it has been invoiced yet. Read the guide →

Common data environment (CDE)

One shared, controlled place for a project's documents and data, used by every party. Read the guide →

Computer vision

AI that interprets images, drawings and video — used for takeoff, progress tracking and safety monitoring. Read the guide →

Conditional lien waiver

A lien waiver that takes effect only once the stated payment is received. Read the guide →

Construction change directive (CCD)

An owner's direction to proceed with changed work before the price is agreed. Read the guide →

Construction draw

A release of construction-loan funds tied to a stage of completion, usually after the lender's inspection. Read the guide →

Construction ERP

Enterprise software that runs a contractor's accounting, job cost, payroll and operations in one system. Read the guide →

Construction intelligence

Software that reads a contractor's accounting, project, payroll and schedule data together and turns it into answers — which jobs are making money, which are going over, and why. How it works →

Cost code

The category a cost is recorded against, usually based on CSI MasterFormat divisions. Read the guide →

Cost code crosswalk

A table mapping every old cost code to its new code and cost type during a system migration, with the rule for any code that splits or merges. Read the guide →

Cost performance index (CPI)

Earned value divided by actual cost; below 1.0 means over budget. Read the guide →

Cost type

The kind of cost on a line: labor, material, subcontract, equipment or other. Read the guide →

Critical path

The longest chain of dependent activities in a schedule; it sets the finish date and has zero total float. Read the guide →

Critical path method (CPM)

Scheduling by linked activities, where the longest chain of dependent work sets the finish date. Read the guide →

CSI MasterFormat

The Construction Specifications Institute's 50-division standard for organising construction work. Read the guide →

D

DART rate

Days away, restricted or transferred cases × 200,000 ÷ hours worked. Read the guide →

Days sales outstanding (DSO)

Accounts receivable divided by revenue, times days in the period — how long owners take to pay. Read the guide →

DCMA 14-point assessment

A standard set of schedule quality checks — logic, constraints, float, durations — with thresholds. Read the guide →

E

Earned hours

The hours the estimate allowed for the work actually installed. Read the guide →

Earned revenue

Contract value multiplied by percent complete. Read the guide →

Earned value (EV)

The budgeted cost of the work actually done — budget times percent complete. Read the guide →

Estimate at completion (EAC)

The forecast of a job's total cost when finished: cost to date plus estimate to complete. Read the guide →

Estimate to complete (ETC)

The forecast cost of the work that remains. Read the guide →

Experience modification rate (EMR)

A workers' compensation multiplier comparing actual losses with expected losses; 1.0 is average. Read the guide →

F

Fade

The drop in a job's forecast gross margin since award. Read the guide →

Free float

How long an activity can slip without delaying the early start of any activity that follows it. Read the guide →

Front-loading

Putting more of the contract sum on early schedule of values lines so billing runs ahead of the work; shows as over-billing. Read the guide →

G

Generative scheduling

Software that builds and compares many possible construction sequences from scope, crews and constraints. Read the guide →

H

Hallucination

A confident but false answer from a language model — the reason AI answers must cite their source. Read the guide →

L

Large language model (LLM)

AI that reads and writes text, behind assistants such as ChatGPT and Claude and most document-review tools. Read the guide →

Lien waiver

A signed release of mechanic's lien rights, usually given in exchange for a payment; conditional or unconditional, progress or final. Read the guide →

Look-ahead schedule

A short-interval plan, usually three weeks, of crew-level tasks and their open constraints, updated weekly from the master schedule. Read the guide →

O

OCO (owner change order)

A change the owner has approved, which changes the budget and the owner contract. In Autodesk Build, one or more CORs form an OCO. Read the guide →

Origin ID

In Procore, the ID of the matching record in the external ERP. Its presence marks a record as synced between the two systems. Read the guide →

Over-billing

Billings ahead of earned revenue — cash received for work not yet in place. Read the guide →

P

P50 / P80 finish

The dates by which a project has a 50% and 80% chance of finishing, from a schedule risk forecast. Read the guide →

Parallel run

Posting the first month after a system cutover in both the old and new systems and comparing them, to catch mapping errors that only appear in new transactions. Read the guide →

PCO (potential change order)

A possible change to a job's budget or cost, priced with cost items before anyone has approved it; the starting point of Autodesk Build's change order chain. Read the guide →

Percent plan complete (PPC)

Tasks completed as planned in a week divided by tasks committed for that week. Read the guide →

Percentage of completion

Revenue recognition in proportion to progress, usually cost to date divided by forecast total cost. Read the guide →

Planned value (PV)

The budgeted cost of the work scheduled to be done by now. Read the guide →

Plug number

An estimator's value for a scope item a bidder excluded, added to that bid during leveling. Read the guide →

Productivity factor

Actual hours divided by earned hours; above 1.0 means crews used more hours than planned. Read the guide →

Progress invoice

An invoice for the share of the contract completed through a date, less retainage and previous invoices. Read the guide →

Q

Quantity takeoff

Measuring quantities — counts, lengths, areas, volumes — from drawings for an estimate. Read the guide →

R

Reality capture

Recording site conditions with 360° cameras, lidar or drones so they can be compared with plans and models. Read the guide →

Reporting database

A copy of the ERP's tables in SQL Server or Azure SQL, refreshed on a schedule and read through read-only logins, so reports never run against the live accounting system. Read the guide →

Retainage

The share of each progress payment held back until completion, commonly 5% to 10%. Read the guide →

S

Schedule of values (SOV)

The breakdown of the contract sum into billable lines, used for progress billing. Read the guide →

Schedule performance index (SPI)

Earned value divided by planned value; below 1.0 means behind schedule. Read the guide →

Stored materials

Material delivered to site or a bonded warehouse but not yet installed; billable on a pay application where the contract allows. Read the guide →

Substantial completion

The point at which the work is complete enough for its intended use; often triggers retainage release. Read the guide →

System of record

The one system allowed to create and edit a given piece of data; every other system receives read-only copies. Read the guide →

T

Tie-out

Comparing one total in two systems — a trial balance, a job's cost to date, an aging — and explaining every difference. The proof a migration or a reporting copy lost nothing. Read the guide →

Time and materials (T&M)

Billing for actual labor hours at agreed rates plus materials with an agreed markup, backed by signed field tickets. Read the guide →

To-complete performance index (TCPI)

The cost efficiency the remaining work needs to finish on budget. Read the guide →

Total float

How long an activity can slip without delaying the project finish: late start minus early start. Read the guide →

TRIR

Total recordable incident rate: recordable cases × 200,000 ÷ hours worked. Read the guide →

U

Unconditional lien waiver

A lien waiver that takes effect when signed, whether or not payment arrives — signed only after funds clear. Read the guide →

Under-billing

Earned revenue not yet billed — the contractor is financing the work. Read the guide →

Unsigned work in place

Cost booked against a change order that has not been approved. Read the guide →

V

Variance at completion (VAC)

The difference between the forecast at completion and the budget. Read the guide →

W

Work in progress (WIP) schedule

The report of every open job's contract, forecast, earned revenue and billing position. Read the guide →

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