common commercial construction terms you should know

The Most Common Commercial Construction Terms You Should Know

Every industry has terms and acronyms that has many newcomers feeling like they are learning a new language. As a tech company focused on construction, we spend a good amount of time helping our employees understand the ins and outs of the construction industry. Following are some helpful commercial construction terms that help give our team members a better understanding of our customers and the challenges they are experiencing within the construction industry.



General Contractor – The prime contractor on a project responsible for oversight on a project, which include overall scheduling, budget, and management of subcontractors.

Subcontractor – Generally, subcontractors perform services under contract with the General Contractor. Many subcontractors are contracted by a General Contractor due to their trade specialty. Examples of specialty trade subcontractors include electrical, mechanical, drywall, glass and glazing, concrete.

Foreman – The Foreman is the lead supervisor in charge of crew on jobsite is the foreman. With many years of construction experience, he is responsible for executing the daily tasks on a project and documenting the work completed.

Project Manager – The Project Manager is responsible for the overall management of construction projects. By managing costs, schedules, and deliverables, the Project Manager ensures optimal client satisfaction. On a project, the owner, general contractor, and each trade subcontractor all have their own designated project managers who work collaboratively to execute the project.

Project Delivery Models and Philosophies

Design-Bid-Build – This is the traditional model of construction project delivery in which an owner contracts with a design firm to design a building. After the design is completed, the owner solicits bids from contractors to build. Contractors solicit bids from several subcontractors in order to obtain accurate costs and schedule proposal to submit. In this instance, usually the lowest priced bids are selected.

Design-Build – In the Design-Build project delivery model, the owner contracts with one firm to manage both the design and construction on a project. The idea is that by contracting with one entity promotes more early collaboration in the design phase to reduce risk during the construction phase.

Integrated Project Delivery (IPD) – In an IPD model, a builder, an architect, and an owner enter into a single multi-party contract. The contracts allows all stakeholders to share risk and incentives reward.

Integrated Labor Delivery (ILD) – Subcontractors perform 80-100% of the labor on construction projects. Therfore, an Integrated Labor Delivery model brings labor closer to the IPD framework. As a result, labor actually begins at the design phase. ILD streamlines the process from design through prefabrication and assembly and presents a united framework to an industry plagued with labor shortages and poor productivity.

Lean Construction – Lean construction seeks to manage a project through relationships and shared goals between all stakeholders in order to maximize value and minimize waste.

Target Value Design – All the stakeholders (owner, designer, contractors, specialty trades, etc) design to the budget and goals of the owner. This differs from the conventional process of designing first and then re-designing to eliminate cost overruns.

Construction Documents

Bid – A price proposal usually based on design documents and specifications.

Change Order – A written document, which modifies the plans and specifications and/or the price of the construction Contract.

Request for Information – An RFI is primarily used to gather information to help make a decision on what steps to take next.

Submittal / Transmittal – In construction management are shop drawings, material data, samples, and product data. Submittals are required primarily for the architect and engineer to verify that the correct products will be installed.

Purchase Orders (PO) – A  PO is an official offer issued by a buyer to a seller. The PO indicates types, quantities, and agreed prices for products or services. It is used to control the purchasing of products and services from external suppliers.

Subcontract – An agreement between the main contractor and another contractor to perform a specific set of construction services.

Daily Report – Usually completed by Foreman at the end of the day, a daily report is used to document jobsite activity. The foreman captures information such crew information, equipment used, materials installed, safety incidents, work completed, weather, and other pertinent information that may have hindered progress.

Punch List – At the end of a project, a punch list is a document listing items that are not completed to the customer’s specifications or satisfactions. The punch list items must be completed in order for the contractor to complete the job and receive payment.

Field Work Order – A document usually given by the general contractor to a subcontractor. The document is a directive to complete work that may be out of scope.

Time and Materials (T&M) – A contracting method in which a contractor is paid strictly on actual costs including time and materials and either a mutually-agreed upon for profit and overhead.

Lien – Contractors file a lien, a claim on a property, when they have not been paid on work they have conducted on the property.

Design Terms

Building Information Model (BIM) – Designers develop BIM, a digital representation of a building, to assist throughout the building’s lifecycle. It aids from planning, design, construction, to facility operations. Used effectively BIM improves collaboration, reduces waste, improves project delivery. With BIM, contractors deliver a model full of valuable data to aid in facility maintenance.

Drawings – Construction drawings are the graphic and written record what is to be built.

Specifications – Specifications detail the materials and desired quality of what the building design.

Blueprints – Used interchangeably with drawings. Before digital drawings and modern-day printers, the method of printing blueprints caused the paper to turn blue.

As-builts – Throughout the process of construction errors in drawings are found. Therefore, the building is not constructed exactly as designed. As-builts are complete record of drawings of the final building, specifications, and work completed.

Elevation – An elevation drawing shows finished appearance and the vertical height dimensions of each side of a building.

Floorplan – Floorplans show the layout of a building when viewed from above.

Section – Section drawings show different views of a building as if it were cut on a vertical plane. In this context, floorplans can be view of a drawing cut on a horizontal plane.

Shop Drawings – Contractors produce shop drawings to show the detail of the fabrication of specific components.

Accounting Terms

Cost code – Codes based on labor activity often used to budget and track expenses. Some examples include install, framing, site

Job Costing – It is a cost accounting methodology for tracking expenses to a particular project. Job costing using cost codes allows you to track work completed. You can accurately measure if the activity costs align with the budget.

Schedule of Values – Schedule of values is a list of work items on a project corresponding with their value. The list of tasks with corresponding value represent the entire amount of a construction contract. Contractors utilize a schedule of values in conjunction with processing pay applications.

Pay Applications – An application for payment is a construction document that identifies and presents how a contractor will be paid. The application for payment includes the services or materials that are being incorporated or jobs that are being executed under a contract agreement.

This is just a handful of common commercial construction terms that we utilize in our onboarding process. Another important part of giving others an important inside look into construction is going to a jobsite or working alongside project team members in the office. This gives an important context in real-world usage of common commercial terms.

Reach out today to schedule a demo and learn how eSUB can transform your business into a well-oiled construction project tracking machine!