The plain-English construction estimating glossary.

A bill of quantities is a document that lists every measured item of work and material on a job, with quantities and units, ready to be priced. It is usually prepared to RICS NRM rules so the same measurement means the same thing to everyone tendering. Each contractor prices the same list, which makes bids easy to compare. It also becomes the basis for valuing variations and interim payments.

BoQ is the common abbreviation for bill of quantities. It is a document that lists every measured item of work and material on a job, with quantities and units, ready to be priced. In the UK it is usually measured to RICS NRM so the same description means the same thing to everyone tendering.

Contingency is a sum of money set aside in a budget to cover unforeseen costs and risks. It is not allocated to any specific item, it is a buffer for the things you cannot predict, such as ground conditions or design changes. It is usually expressed as a percentage of the construction cost. As risks are resolved, unused contingency can be released.

A cost plan is an early estimate of what a project will cost, broken down by element such as substructure, frame, roof and finishes. It is built before detailed drawings exist, often using rates per square metre and benchmark data. The plan is refined as the design develops. It gives developers and clients a budget to design and make decisions against.

Dayworks is a way of pricing work based on the actual labour, plant and materials used, rather than on measured quantities. It is used for extra or unforeseen work that does not fit the agreed rates. Time and resources are recorded on signed sheets and charged at agreed daywork rates plus a percentage for overheads and profit. It is a fallback for valuing work that cannot be measured.

The defects liability period, or DLP, is the time after practical completion during which the contractor must return to fix defects that appear. It is commonly six to twelve months on UK contracts. At the end of it, any remaining faults are made good and the final half of retention is usually released. It is sometimes called the rectification or defects correction period.

An elemental estimate breaks a project's cost down by building element, such as substructure, superstructure, internal finishes, services and external works. Rather than pricing every measured item, it puts a cost against each element, often using rates per square metre. It is used early in design when detail is limited. RICS NRM provides the standard list of elements.

A fixed price means the contractor agrees to carry out a defined scope of work for an agreed sum that does not change with the actual cost. The price only moves if the scope changes through variations. The risk of cost overruns on the agreed work sits with the contractor, not the client. It gives the client cost certainty for the work as defined.

Gross internal area, or GIA, is the floor area of a building measured to the inside face of the external walls, including internal walls, columns and circulation. It is a standard way of measuring buildings used for cost rates, comparisons and valuations. RICS publishes the measurement rules that define it. Costs per square metre are usually quoted against GIA.

A labour rate is the cost of a worker's time, usually expressed per hour or per day. It should reflect not just wages but the all-in cost of employing someone, including national insurance, holiday, pension and non-productive time. Labour rates are combined with measured quantities and outputs to price the labour content of each item. Getting them right is central to a profitable estimate.

A measured survey is an accurate record of the dimensions of an existing building or site. It captures lengths, levels, openings and features, and is presented as scaled drawings. It gives a reliable base for design, take-offs and pricing where as-built information is missing or out of date. On refurbishment work it is often the starting point for everything else.

Overheads and profit, often shown as OH&P, is the percentage added to the cost of work to cover running the business and to make a return. Overheads are the costs of being in business that are not charged to a single job, such as office, vehicles, insurance and admin. Profit is the return you make for taking on the risk. It is usually added as a percentage on top of net costs.

Practical completion, or PC, is the point at which the works are finished enough for the client to take over and use the building, even if minor snags remain. It marks handover and starts several contractual clocks. At PC, responsibility for the building usually passes to the client, the first half of retention is often released and the defects liability period begins. It is a key milestone in any building contract.

Preliminaries are the costs of running a site that are not tied to any single item of work. They include things like site management, welfare, scaffolding, plant hire, fencing, skips, insurance and temporary services. Prelims are usually shown as a separate section in a bill of quantities. They are real costs that must be priced or you lose them from your margin.

Prime cost is the basic supply cost of materials or goods, before adding labour, overheads and profit. It is the net figure you pay a supplier for the item itself. The term underpins prime cost sums, where an allowance covers the supply of an item the client will choose later. Knowing the prime cost lets you see clearly what is supply and what is mark-up.

A prime cost sum, or PC sum, is an allowance in a price for materials or goods that the client will choose later, such as kitchen units, tiles or sanitaryware. The figure covers the supply only, and labour, fixing and profit are priced separately. When the client picks the actual product, the PC sum is adjusted to the real cost. It lets pricing proceed before final selections are made.

A provisional sum is a figure included in a price for work that cannot be fully measured or designed yet. It is an allowance, not a fixed price, set aside so the budget reflects work that is still uncertain. When the detail is known the actual cost replaces the allowance and the contract value is adjusted. RICS NRM splits these into defined and undefined provisional sums.

Retention is a percentage of each payment the client holds back as security that the work will be finished and any defects put right. On UK contracts it is commonly 5 percent, sometimes reducing once practical completion is reached. It is usually released in two halves, one at practical completion and one at the end of the defects liability period. It is your money, held until you have earned it back.

RICS NRM stands for the Royal Institution of Chartered Surveyors New Rules of Measurement. It is the recognised UK standard for measuring and describing building work in estimates, cost plans and bills of quantities. It sets out consistent rules for what to include, how to measure it and how to present it. Using NRM means everyone reads the numbers the same way.

A schedule of works is a written, room-by-room or task-by-task list of everything that needs doing on a job. Unlike a bill of quantities it is description led rather than fully measured, so it suits refurbishment and smaller works. Each item is priced as a lump sum or with simple quantities. It tells everyone exactly what is in scope.

Snagging is the process of identifying and fixing minor defects and unfinished items near the end of a job. A snagging list records faults such as poor finishes, missing fittings or small damage, which the contractor then puts right. It usually happens around practical completion. Clearing snags is often tied to releasing the first half of retention.

A take-off is the process of measuring quantities of work and materials directly from the drawings. It produces the lengths, areas, volumes and counts you need before any rates are applied. The take-off feeds straight into a bill of quantities, a materials schedule or an estimate. Done properly it stops you ordering too much or too little.

A tender is a formal priced offer to carry out construction work for a stated scope. The client issues tender documents, often including drawings and a bill of quantities, and contractors return their prices by a deadline. The bids are compared and one is selected, usually on a balance of price and quality. Tendering is the standard way work is competitively awarded in the UK.

A variation is an authorised change to the scope of work after the contract is agreed. It can add, remove or alter work, and it adjusts the contract sum and sometimes the programme. Variations are usually valued using the rates in the bill of quantities, or by dayworks where no rate applies. They are how a contract copes with change without being torn up.