Best Value Method: The best value method involves evaluating and ranking contractors based on their bids and qualifications, and assessing who is the most qualified for the best price.
Bid: A bid is a proposal to undertake a construction project or an aspect of the construction project.
Bid Package: A bid package is a portfolio of documents, including estimates, drawings, and specifications, that one submits for consideration for a construction project.
Bid Solicitation: A bid solicitation is contact, generally through a letter or email, to notify qualified bidders of the opportunity to bid on a construction project.
Bill of Quantities: A bill of quantities is an itemized document that lays out the costs of each component of a construction project.
Cost plus: This is a contract in which the buyer agrees to pay for all supplies and labor, as well as an additional amount for contractor profit.
Guaranteed Maximum Price (GMP): A GMP is a contract in which you set a ceiling for how much the owner will pay (unless there is a change in project scope).
Hard Bid/Fixed Price/Stipulated Lump Sum: This is a contract in which the contractor agrees to one total sum for all components of the project. You generally use this type of contract for projects that have well-defined costs and components.
Lease Leaseback: This is a contract in which the owner sells the property and then leases it from the purchaser.
Percentage of Construction: This is a less common form of contract in which the compensation is based on a percentage of construction costs.
Time and Material: This is a contract in which you agree upon a price based on the time involved and materials you use for the project.
Unit Price: This is a contract in which you determine the final cost based on the unit prices of materials.
Contractor: A contractor is a company or person that signs a contract to provide construction services, generally concerning labor or materials.
Cost Reimbursement/Cost-plus Contract: This is a contract in which the agency provides funds beyond those required for materials so that the construction company or contractor can make a profit.
CSI Code/MasterFormat: CSI (Construction Standards Institute) publishes MasterFormat, a publication that provides standards for construction projects. It includes detailed numbers, cost information, requirements, and specifications for most construction and building design projects within North America.
Design-Bid-Build (DBB): Also called design-tender, this is a method in which the architect creates a detailed design of the project that they then present to potential contractors. The contractors then bid on the project and must construct the building according to this design and its specifications.
Design-Build (D-B): Design-build is a process you use primarily for residential construction, in which you don’t involve an architect in the initial design plans. D-B uses one single contractor or builder for the entire construction process, which allows for more flexibility than design-bid-build.
Design Excellence Program: Created by the U.S. General Services Administration (GSA), the Design Excellence Program provides a streamlined selection process of top-ranked architects and engineers. Professionals in the private sector who use these contractors can also provide feedback for their peers.
Estimate: An estimate is a process through which you project the cost of supplies and labor.
Indefinite Delivery, Indefinite Quantity (IDIQ): An indefinite delivery/indefinite quantity contract (IDIQ contract) is a government contract that allows for an unlimited quantity of services or supplies during a set amount of time.
Job Order Contracting: A type of contract with no set quantities that allows for multiple projects to be completed through a single contract. This contract allows for faster procurement time while eliminating a typical bidding cycle.
Payment Bonds: Contractors put up payment bonds as assurance that their suppliers, laborers, and subcontractors will be paid.
Performance Bonds: Performance bonds provide assurance that the contractor will meet their end of the contract agreement. Usually posted by a bank or insurance company, the contractor must put up some form of collateral.
Preconstruction Services vs. Construction Services: Preconstruction services are the services that a contractor offers before the project officially begins. These can include deliverables, such as project scopes, risk analyses, execution plans, and more. Construction services are the usual services that take place after the commencement of the project.
Prime Contractors: Also known as main contractors, these are the key people or companies that agree to complete the contract. A prime contractor has the authority to hire subcontractors to complete particular parts of the associated contract.
Procurement: A process through which one sources and evaluates all materials, potentially making a purchase.
Prospectus Level: A prospectus level is a dollar amount that the federal government sets for a project.
Rebid: A rebid occurs when an owner doesn’t choose any bid due to a discrepancy in expectations between said owner and the bidders. At this point, the owner must change the scope of the bid. This part of the process is referred to as the rebidding process.
Request for Proposal (RFP): An RFP is a solicitation by a company or agency to prospective contractors or suppliers. It is a company’s way of letting contractors or suppliers know that they are open for proposals for their project.
Scope of Work (SOW): A scope of work is a detailed description of the work that one must complete under the contract. Generally, SOWs are extremely detailed, including designs, materials, deadlines, special considerations, etc. for each aspect of the project.
Sealed Bidding: Sealed bidding is a process in which all prospective contractors (bidders) submit their bids without knowing what the other bidders have submitted.
Source Selection Method: A source selection method is a negotiation process-oriented strategy that agencies use to choose the proposal that best meets their goals. Each company creates their own evaluation plan, which they must follow throughout source selection.
Statement of Work: An official document that outlines all tasks, schedules, deliverables, and activities associated with a project. This document often serves as part of the contract.
Subcontractor: An individual or company that signs a contract to take on a portion of a larger contract.
Two-Step Bidding: This is a process that assesses proposals. The first step is the submission of technical proposals that meet contractors’ set requirements. The second step is the invitation of qualified contractors to provide a bid. It is also referred to as sealed bidding.
Working Drawings: Also known as blueprints or construction drawings, working drawings are sketches, drawn to scale, that serve as a guide for a construction project. These can include information on framing, floor plans, elevation, and more.