Construction estimating requires precision, knowledge and the right terminology. Whether you’re new to the field or a seasoned professional, understanding the language of estimating is essential for accurate project bids and successful construction outcomes.
This comprehensive glossary covers essential terms and concepts you’ll encounter in construction estimating, organized alphabetically for easy reference.
A
Addendum — A written document issued during the bidding period that modifies or clarifies the original bid documents, including drawings and specifications.
Allocation — The distribution of costs, resources or materials across different parts of a project or among multiple cost categories based on predetermined formulas or usage ratios.
Allowance — A specified amount of money included in a bid for materials or work that has not been fully detailed at the time of estimating.
Alternate Bid — A separate price proposal for a specified change or addition to the base bid, allowing the owner to compare different options.
All-in-One Takeoff and Estimating Software — A digital platform that combines both takeoff and estimating functions in a single solution, enabling seamless workflow from measurement through final bid without switching between multiple tools.
Assembly — A grouping of related construction components with combined material, labor and equipment costs used for faster estimating.
B
Base Bid — The primary proposal amount submitted for completing the work as specified in the contract documents, excluding alternates or options.
Bid Bond — A financial guarantee that ensures a contractor will honor their bid and enter into a contract if selected.
Bill of Materials (BOM) — A comprehensive list of all raw materials, components, parts and assemblies required to construct a project, with specific quantities and specifications for procurement and fabrication.
Bill of Quantities (BOQ) — A detailed list of materials, parts and labor required for a construction project with measured quantities.
Building Information Modeling (BIM) — A digital representation of physical and functional characteristics of a building that enables collaborative planning, design, construction and management through 3D modeling and data integration.
C
Change Order — A written modification to the original contract that alters the scope, cost or schedule of the project.
Cloud Reporting — Real-time access to project cost data and estimates through cloud-based platforms, enabling collaboration and data sharing across teams.
Construction Estimating Software — Specialized digital tool designed to automate and streamline the estimating process, including pricing, assembly creation and bid management.
Contingency — A percentage or fixed amount added to an estimate to account for unforeseen conditions, changes or risks.
Cost Code — A numerical or alphanumeric system used to categorize and track construction costs by type of work or material.
Cost Database — A centralized repository of historical cost information, unit prices, and productivity rates used to improve estimating accuracy.
Cost Overruns — Expenses that exceed the original budgeted or estimated amount for a project, resulting from unforeseen conditions, scope changes, delays or inaccurate initial estimates.
Cost-Plus Contract — A contract type where the owner reimburses the contractor for actual costs plus an agreed-upon fee or percentage for profit.
CSI MasterFormat — A standard classification system for organizing construction specifications and cost data into divisions and sections.
D
Design-Build — A project delivery method where a single entity provides both design and construction services under one contract.
Digital Takeoff — The process of measuring quantities from electronic plans using specialized software, replacing manual measurement methods.
Direct Costs — Expenses that can be specifically attributed to a particular project, including labor, materials and equipment.
E
Escalation — An adjustment factor applied to account for anticipated cost increases due to inflation or market conditions over the project duration.
Estimate — A cost projection based on project information, typically expressed as cost per square foot or similar unit.
Estimator — A construction professional responsible for analyzing project plans, specifications and conditions to calculate accurate costs for labor, materials, equipment and other project expenses.
G
General Administrative Costs — Overhead expenses associated with running a construction company’s main office operations, including executive salaries, accounting, legal services, marketing and other non-project-specific business functions.
General Conditions — Indirect project costs such as supervision, temporary facilities, permits and insurance that support the overall construction effort.
Gross Floor Area (GFA) — The total floor area of a building measured to the outer face of exterior walls, used for cost estimating calculations.
H
Historical Cost Data — Recorded costs from previous projects used as a reference for estimating similar future work.
I
Indirect Costs — Overhead expenses not directly tied to a specific project task, such as office expenses, utilities and administrative salaries.
Item — An individual line entry in an estimate representing a specific unit of work, material or assembly with associated quantities and costs.
L
Labor Burden — Additional costs beyond base wages, including payroll taxes, insurance, benefits and workers’ compensation.
Lump Sum — A fixed total price for completing a defined scope of work, regardless of actual costs incurred.
M
Manufacturer — A company that produces construction materials, equipment or products used in building projects, often providing specifications and pricing information essential for accurate estimating.
Markup — A percentage added to costs to cover overhead and profit margins.
Material Quantity — The calculated amount of each material required for a project, typically derived from takeoff measurements and adjusted for waste factors.
Material Takeoff — The process of measuring and listing all materials needed for a project from construction drawings and specifications. This material-specific data feeds directly into the estimating process, where unit costs are applied to the measured quantities to calculate total material expenses. It focuses specifically on identifying and quantifying individual construction materials (concrete, rebar, lumber, etc.), which then becomes the foundation for pricing and cost analysis in the estimate.
Measurements — Quantified dimensions and quantities extracted from construction documents, forming the basis of accurate estimates.
O
Overhead — Operating expenses required to run a construction business that cannot be charged directly to a specific project.
P
Parametric Estimating — A technique that uses statistical relationships and historical data to calculate costs based on project parameters like square footage or unit counts.
Performance Bond — A surety bond that guarantees a contractor will complete the project according to the terms of the contract, protecting the owner against financial loss due to contractor default or failure to perform.
Productivity Rate — The measurement of work output per unit of time, typically expressed as labor hours per unit of work completed.
Profit Margin — The percentage or amount added to total project costs representing the contractor’s net earnings after all expenses, overhead and risks are accounted for.
Project — A temporary construction endeavor with defined objectives, scope, budget and timeline, undertaken to create a specific building, structure or improvement.
Project Management — The planning, coordination and control of a construction project from inception to completion, including estimating, scheduling, budgeting and resource allocation to ensure successful delivery.
Proposal — A formal bid submission that presents the contractor’s price, scope of work, timeline and terms for completing a construction project in response to a request for proposal or invitation to bid.
Q
Quantity Takeoff — The systematic process of determining the quantities of materials and labor required from project plans and specifications. Unlike material takeoff which focuses specifically on listing individual materials, quantity takeoff is the broader, systematic methodology that encompasses measuring all project components — including materials, labor units and work tasks. Quantity takeoff establishes the foundational measurements that drive the entire estimating process, providing the quantitative data needed to apply unit costs and calculate total project expenses.
R
Request for Proposal (RFP) — A formal document inviting contractors to submit competitive bids for a construction project.
S
Scope of Work — A detailed description of the work to be performed, including deliverables, timelines and specifications.
Square Foot Cost — A unit cost method that expresses construction costs as a dollar amount per square foot of building area.
Subcontractor Quote — A price proposal submitted by a specialty contractor for a specific portion of work within a larger project.
Supplier Pricing — Current material and equipment costs provided by vendors and suppliers, essential for accurate project estimates.
U
Unit Cost — The price for one unit of work or material, such as cost per cubic yard, square foot or linear foot.
Unit Price Contract — A contract based on agreed-upon prices for measured quantities of specific work items, with final payment based on actual quantities installed.
V
Value Engineering — A systematic method for improving project value by examining function and reducing costs without sacrificing quality or performance.
W
Waste Factor — An additional percentage added to material quantities to account for cutting, breakage and normal construction waste.
Work Breakdown Structure (WBS) — A hierarchical decomposition of a project into smaller, manageable components or work packages, used to organize and define the total scope of work for planning, estimating and control purposes.
Master Your Estimating Knowledge
Understanding these construction estimating terms is fundamental to delivering accurate, competitive bids and managing profitable projects. As the construction industry continues to evolve with new technologies and methodologies, staying current with estimating terminology ensures clear communication and professional credibility.
The EDGE® construction estimating software combines industry-leading tools with these proven estimating principles to help you work smarter and win more work.
Learn more about how EDGE can transform your estimating process.
Keep this glossary handy as a reference and continue building your expertise in the critical field of construction estimating.
