A
Adjudication
A rapid, binding, but interim, method of dispute resolution. Mandated by law in some countries.
ADR
Alternative dispute resolution. A method to resolve disputes without using courts or Arbitration, such as Mediation and Adjudication.
Arbitration
A method of formal dispute resolution.
Assignment
The transfer of legal rights from one party to another party.
B
Bank guarantee
A guarantee by a bank to pay money to a party. Used interchangeably with Performance bond and SBLC.
BAR
Builder's All-Risk. An insurance policy that protects against loss of or damage to the Works. Also called EAR - Erection All-Risks policy, and CAR - Contractor's All-Risks policy.
BIM
Building information modelling. A detailed digital 3D version of a project used for building design and maintenance.
BOQ
Bill of quantities. A document setting out the quantity of materials required to build something. Usually prepared by an engineer, QS or architect.
C
CAR
Contractor's All-Risk insurance. See BAR.
Change order
A change to the scope of Works, Programme or other aspects of the Works. Also known as a Variation.
COD
Commercial operation date. The date on which the Works are to be completed. See Practical Completion and Substantial Completion.
Collateral warranty
A contractual agreement given by contractors, designers and key subcontractors to third parties such as the Employer, developer, funder, or contractor. Also known as a Direct agreement.
Conditional bond
A security instrument that pays out only if certain conditions are met.
Contractor's proposals
The contractor's detailed commercial and technical offer to the Employer for the Works. Usually provided in response to a RFP.
Contract price
The price payable to the contractor for the completion of the Works.
Cost-plus contract
A method of contracting by which the contractor is paid its verified actual costs plus a fixed % for overhead and profit. Requires open book accounting and trust.
Critical path
Project activities that are time-critical or time-sensitive. Any delay to these will delay the completion of the Works.
D
Defect
A defect in the Works or in its design.
Demurrage
Charges payable to a ship-owner for not loading or discharging cargo on time.
Design and build contract
A contract under which the contractor takes full responsibility for the design and construction of the Works.
Direct agreement
See Collateral warranty.
DLP
Defects liability period. The period after completion of the Works during which the contractor is responsible for fixing defects.
E
EAR
Erection All-Risks insurance. See BAR.
Employer
The project owner that contracts with the main contractor. Sometimes referred to as the owner or developer.
Employer's requirements
The Employer's technical and commercial requirements for a project.
Entire contract
A contract under which the contractor is paid only when the entire Works are complete.
EOT
Extension of time. An extension to the Guaranteed completion date.
F
FIDIC contract
A standard form of contract published by the International Federation of Consulting Engineers.
Final account
Final closing-out of the contractor's account. Usually occurs with the expiry of the DLP.
G
GMP
Guaranteed maximum price. An absolute ceiling on the Contract price.
Guranteed completion date
The date by which the Works must be completed.
H
Heat rate
A measure of a power plant's efficiency in converting fuel to heat and power.
HGCRA
The Housing Grants, Construction and Regeneration Act 1999 of England & Wales. Otherwise known as the Construction Act.
I
Indemnity
A method for transferring risk for from one party to another.
ITT
Invitation to tender. See RFP.
J
Joinder
Forcing a third party to become a co-defendant in court proceedings or Arbitration.
JCT contract
A standard form of contract published by the Joint Contracts Tribunal.
K
Key personnel
Project personnel that cannot be replaced without the consent of a counterparty.
L
LAD
See LD.
Latent defect
A Defect in the Works that is not apparent or cannot be discovered.
LD
Liquidated damages. A fixed amount of money payable if completion of the Works is delayed or the plant under-performs. Also known as LAD (liquidated ascertained damages).
LOI
Letter of intent. A letter from the Employer that allows the contractor to commence the Works pending execution of the contract itself.
LNTP
Limited Notice to Proceed. Similar to LOI, except that the contract itself is usually executed but the Employer is not ready to fully release the contractor to commence the Works.
Loss and expense
Costs incurred by a contractor as a result of a delay to the progress of the Works.
Lump sum contract
A fixed price contract.
M
Management contracting
A method of procurement by which there is no main contractor. Instead, the Employer appoints a management contractor to manage the Employer's trade contractors.
Mareva injunction
Asset freezing order issued by a court.
MCI
Marine cargo insurance. Insurance that protects cargo on a vessel against specified perils.
Mediation
A method for resolving disputes, involving shuttle diplomacy by a neutral third party.
N
NEC contract
A standard form of contract published by the National Engineering Council.
Nominated subcontractor
A subcontractor selected by the Employer for the execution of certain Works.
Novation
The transfer of rights and obligations under a contract from one party to another.
NTP
Notice to Proceed. The contractor is fully released by the Employer to commence all of the Works.
O
Off-shore contract
A product of Split contracts. This is a contract that is typically executed by an off-shore company for off-shore supply of goods and services such as overseas equipment procurement and overseas engineering services.
OMM
Operation and maintenance manuals. Alo referred to as O&M manuals.
On-shore contract
A product of Split contracts. This is a contract that is typically executed by an on-shore company for on-shore supply of goods and services, such as construction work and on-shore procurement.
P
Performance bond
Similar to Bank guarantee, except that it may not necessarily be an on-demand instrument.
Performance guarantee
Guaranteed performance to be achieved when the Works are complete e.g. output, heat rate.
Practical completion
The Works are complete save for minor defects that do not affect the use or operation of the project.
Programme
The scheduled sequence for the execution of the Works.
Provisional sum
An estimated amount for certain aspects of the Works, which would be finalized at a later date.
Punch list
List of minor defects at Practical Completion, also called Snags, that the contractor must fix during the DLP. Also known as a snagging list.
Q
QS
Quantity surveyor. A professional that specialises in construction costing and contracting.
R
Recovery plan
Contractor's plan to get delayed Works back up to speed.
Retention
Also known as retainage. An amount held back from payments of the Contract Price, and held as security for the Employer. Half of the Retention is usually retrned to the contractor on Practical completion and the other half on expiry of the DLP.
RFP
Employer's request for proposals from contractors. See ITT.
S
SBLC
Standby letter of credit. An unconditional promise by a bank to pay money to someone. See Bank gaurantee.
Sectional completion
The Works are split into sections, or phases, each with its own Contract price, commencement date, date for Practical Completion, LD and DLP, but under a single contract.
Site
The place at which the Works will be constructed.
Snag
Defective or incomplete items of Works that form the basis of a Punch list.
SMM
Standard method of measurement. A standardised tool used to develop a BOQ.
SOPA
Security of Payment Act or, by its long name, the Building and Construction Industry Security of Payment Act of Singapore.
Split contracts
A contract that is bifurcated between an Off-shore contract and On-shore contract.
Subcontractor
A direct supplier to a contractor.
Subrogation
An insurer's right to take over the rights of an insured with respect to an insured risk.
Substantial completion
See Practical completion.
Subsurface conditions
Physical conditions that exist beneath the surface of a Site.
Surety bond
A promise by an insurance company that a party will honour the terms of its contract.
T
Taking over
The Employer taking over care, custody and control of the Works.
Tender
Contractor's proposal to the Employer for a project.
Tests
Tests performed on the completed Works to assess whether Performance guarantees are met.
Traditional contract
A contract under which the contractor only constructs the Works, but does not design them. See Design and build contract.
Turnkey contract
See Design and build contract.
U
Umbrella
A contract that effectively unifies an Off-shore contract and an On-shore contract.
V
Value engineering
A proposal by a contractor to optimise the design of the Works to achieve a better Contract price for the Employer.
Variation
See Change order.
W
Warranty period
See DLP.
Works
The entirety of the Works, materials and plant that the contractor is to execute and supply for the Works.
Wrap
See Umbrella.