01 Flashcards
ACCOUNT
tabular record of financial transactions related to a particular item or class of items; used to classify and record financial details of business transactions of the firm.
ACCOUNTS PAYABLE
Money owed by the firm to vendors, consultants, or others for merchandise or services that have been provided to the firm on open account or short-term credit.
ACCOUNTS RECEIVABLE
Money owed by clients to the firm for services rendered or for reimbursement of expenses. Accounts receivable are aged until they are collected or until it becomes apparent they will not be collectible, at which time they are written off as bad debt.
ACCRUAL-BASIS ACCOUNTING (MODIFIED)
Revenue earned from project fees and expenses invoiced to clients.
ADDENDUM (PL. ADDENDA)
A written or graphic instrument issued by the architect before the execution of the construction contract that modifies or interprets the bidding documents by additions, deletions, clarifications, or corrections.
ADDITIONAL SERVICES
Professional services that may, if authorized or confirmed in writing by the owner, be rendered by the architect, generally for additional compensation, in addition to the basic services identified in the owner-architect agreement.
ADMONITION
A private reprimand issued by a jurisdictional registration board (or other administrative agency) for
violation of professional conduct rules in that jurisdiction, or by the AIA for violation of its Code of Ethics and Professional Conduct. See also Censure.
ADVERTISEMENT FOR BIDS
Published public notice soliciting bids for a construction project or designated portion thereof, included as part of the bidding documents; most frequently used to conform to legal requirements pertaining to public projects and usually published in newspapers of general circulation in those political subdivisions from which the public funds are derived or in which the project is located.
AGED ACCOUNTS RECEIVABLE
Accounts receivable classified according to the length of time each invoice has been outstanding. The age analysis highlights which accounts are falling past due.
AGENT
A person or entity that has an agency relationship with and acts for or in place of another. See also (attorney-in-fact)
AGENCY RELATIONSHIP
A fiduciary relationship in which the “agent” is authorized to perform certain binding acts on behalf of the principal. Under AIA Contract Documents the architect is not an aagent of the owner. See also (fiduciary)
AGREEMENT
- ) A mutual understanding between two or more persons regarding their relative rights and duties for past or future performances
- ) Legally enforceable obligations between two or several persons
- ) The document stating the terms of the contract between the parties, as between owner and architects, architect and consultants, or owner and contractor. Although, “agreement” is a broader term, it is frequently used interchangeably with “contract” without any intended change in meaning. See also (contract)
ALLIANCE
A business relationship between two or more entities in which each entity retains its own identity and internal control; formed to further the common interests of those entities.
ALTERNATE
A proposed possible change in the work described in
the contract documents; provides the owner with an option to select between alternative materials, products, or systems, or to add or delete portions of work.
ALTERNATE BID
Amount stated in the bid to be added to or
deducted from the amount of the base bid if the
corresponding change in work, as described in the bidding documents, is accepted. An alternate bid resulting in an addition to the bidder’s base bid is an additive (or “add”) alternate, and an alternate bid resulting in a deduction from the base bid is a deductive (“deduct”) alternate.
ALTERNATE DISPUTE RESOLUTION (ADR)
A method of resolving disputes by means other than litigation, such as mediation, arbitration, mini-trial, project neutral, or dispute review board.
ANTI-INDEMNIFICATION STATUTES
Laws that invalidate contract clauses related to a party being indemnified or held harmless for damages or that limit the ways such contract clauses operate.
ANTITRUST
Laws to protect trade and commerce from unlawful restraints and monopolies or unfair business practices
APPLICATION FOR PAYMENT
Contractor’s certified request for payment for completed portions of the work and, if the contract so provides, for materials or equipment suitably stored pending their incorporation into the work.
APPROVED EQUAL
Material, equipment, or method proposed by
the contractor and approved by the architect for
incorporation or use in the work as equivalent in essential attributes to the material, equipment, or method specified in the contract documents.
ARBITRATION
Method of dispute resolution in which an arbitrator or panel of arbitrators evaluates the merits of the positions of the respective parties and renders a decision.
ARCHITECT
A person who is licensed to design buildings, prepare
and issue construction documents, and administer
construction contracts. In all states, either the term
“architect” or the term “architecture” is statutorily defined.
ARCHITECT OF RECORD
The architect licensed in the jurisdiction in which the building is located who prepares, seals, and signs the construction documents; may also be called the executive architect, when a consulting architect is retained for the design phase, or for other services.
ARCHITECT-CONSULTANT AGREEMENT
Contract between an architect and another firm (e.g., engineer, specialist, another architect, or other consultant) for professional services.
AS-CONSTRUCTED RECORD DRAWINGS
Drawings that reflect the record of the building project as constructed based on information the contractor provides to the owner under the contract for construction. Because the as-constructed record drawings are based on the contractor’s markups, the architect is not responsible for their accuracy or completeness.
Commonly referred to as “as-builts.”
AS-DESIGNED RECORD DRAWINGS
Drawings that reflect the record of everything the architect designed for the project, and include the original construction documents plus all addenda, architect’s supplemental instructions, change orders, construction change directives, and minor changes in
the work.
ATTORNEY-IN-FACT
A person authorized to act for or on behalf of
another person or entity to the extent usually prescribed in a written instrument known as a power of attorney.
AUTHORITY HAVING JURISDICTION (AHJ)
A federal, state, local, or other regional deparment or its representative having statutory authority to enforce compliance with particular codes, standards, or other requirements.
BACKLOG
Dollar value of anticipated revenues from projects
contracted but as yet unearned (i.e., the work is contracted but has not been performed or invoiced to clients).
Backlog is reduced by the value of revenue earned and increased by the value of new commissions acquired in any accounting period.
BAD DEBT
A debt owed to the firm that is uncollectible (e.g.,
invoiced amounts on aged accounts receivable that can be written off due to clients’ failure to pay).
BALANCE SHEET
A statement of the firm’s financial condition as
of a specific date. It is a statement of the balance between the asset accounts and the total of liabilities and net worth (owners’ equity) accounts.
BANKRUPTCY
A state of insolvency in which the property of the
debtor (an individual or a business) may be placed under the control of a court-appointed trustee for the benefit of creditors, with the objective of either reorganizing and rehabilitating the business or dissolving it and liquidating its assets.
BASE BID
Amount of money stated in the bid as the sum for
which the bidder offers to perform the work described in the bidding documents, exclusive of adjustments for alternate bids.
BASIC SERVICES
Common services of architectural design as
recognized in the industry and described in the ownerarchitect agreement and provided for basic compensation. AIA Document B101™–2007, for example, includes a basic services package for schematic design, design development, construction documents, bidding or negotiation, and construction phase services. Distinguished from additional services.
BENEFICIAL OCCUPANCY
Use of a project or portion thereof for the purpose intended.
BENEFITS, EMPLOYEE
Personnel benefits required by law (such as
employment taxes and other statutory employee benefits) and by custom (such as health insurance, sick leave, holidays, vacations, pensions, and similar contributions and benefits). Sometimes called “customary and mandatory benefits.”
BEST-VALUE PROCUREMENT
The evaluation and selection of construction and/or design services where total costs are considered along with other specialized qualification criteria, including past performance.
BETTERMENT
An improvement to a property that enhances its
value more than mere replacement, maintenance, or repairs;
a defense to an owner’s defective design claim against the architect, under which the architect is responsible only for extra costs the owner incurs due to the defect, and the owner is responsible for the cost it would have paid had the design been properly performed at the outset.
BID
A complete and properly signed proposal, submitted in
accordance with the bidding requirements, to perform the work or a designated portion thereof for the amount or amounts stipulated therein.
BID BOND
A form of bid security executed by the bidder as
principal and by a surety to guarantee that the bidder will enter into a contract within a specified time and furnish any required bond. See also Bid security.
BID FORM
A form prescribed by the bidding requirements to be
completed, signed, and submitted as the bidder’s bid.
BID OPENING
The physical opening and tabulation of sealed
bids following the time specified in the bidding
requirements. This term is preferable to “bid letting.”
BID PRICE
The amount stated in the bid.
BID SECURITY
A deposit of cash, certified check, cashier’s check,
bank draft, stocks or bonds, money order, or bid bond
submitted with a bid; provides that the bidder, if awarded the contract, will execute such contract in accordance with the requirements of the bidding documents.
BID TIME
The date and hour established by the owner or the
architect for the receipt of bids.
BIDDER
A person or entity that submits a bid for a prime
contract with the owner; in contrast to a sub-bidder, who submits a bid to a prime bidder.
BIDDING DOCUMENTS
The documents required to bid or
negotiate the construction contract, including the bidding requirements, contract forms, contract conditions, specifications, drawings, and addenda.
BIDDING PERIOD
The calendar period beginning when bidding documents are issued and ending at the prescribed bid time.
BIDDING REQUIREMENTS
Collectively, the advertisement or invitation to bid, instructions to bidders, sample forms, the bid form, and portions of addenda relating to bidding requirements.
BILLABLE TIME
Time that is charged to projects (direct time) and
is ultimately invoiced to the client. See also Chargeable time.
BILLING RATE
The price per unit of time (hour, day, week) for staff (principal or employee) billed to a client for work under a contract for a project.
BONA FIDE BID
Bid submitted in good faith, complete, and in accordance with the bidding documents, and properly signed by a person legally authorized to sign such bid.
BOND
In suretyship, an obligation by which one party (surety or obligor) agrees to guarantee performance by another (principal) of a specified obligation for the benefit of a third person or entity (obligee). See also Bid bond, Completion bond, Dual obligee bond, Fidelity bond, Payment bond, Performance bond, Statutory bond, and Supply bond.
BONUS CLAUSE/PENALTY CLAUSE
A bonus clause is a clause in a contract that rewards the contractor for doing more than the letter of the contract; in particular, for completing construction early. It is the inverse of a penalty clause, where the contractor is penalized for providing less than the letter of the contract, or completing the work later than agreed.
BREACH OF CONTRACT
The failure, without legal justification, to fulfill an obligation required by contract. The breach of a contract can be intentional, inadvertent, or caused by the negligence of the party breaching the contract.
BREAK-EVEN RATE
The overhead rate plus the unit cost of 1.00
for an hour of salary.
BREACH OF DUTY
The violation of a legal obligation.
See also Duty and Negligence.
BUDGET
The sum established as available for a given purpose.
See also Construction budget, Project budget, and (for the architecture firm) Internal project budget.
BUDGETING
(1) Forecasting future business activities of the firm,
usually for fiscal periods or for specific projects in terms of revenues, expenses, and income (profit);
(2) developing a plan for achieving future desired activities;
(3) planning expenditures of time or money. These definitions can also be applied to budgeting construction or project costs or the firm’s costs of providing professional services.
BUILDER’S RISK INSURANCE
A specialized form of property insurance that provides coverage for loss or damage to the work during the course of construction.
BUILDING PERMIT
A permit issued by appropriate governmental authority allowing construction or renovation of a project in accordance with approved construction documents.
BUSINESS INCOME (OR INTERRUPTION) COVERAGE
Insurance protecting against financial loss during the time required to repair or replace property damaged or destroyed by an insured peril. (Also called loss-of-use coverage).
BUSINESS PLAN
Plan that describes the strategic and tactical
goals of a business entity.
Strategic issues include mergers and acquisitions, geographic locations, research and development, market penetration, forecasts, new product introduction, and business integration.
Tactical considerations include product and quantity information, head counts, subcontracting, logistics, and processes.
CASH ALLOWANCE
An amount established in the contract documents for inclusion in the contract sum to cover the cost of prescribed items not specified in detail, with the provision that variations between such amount and the finally determined cost of the prescribed items will be reflected in change orders appropriately adjusting the contract sum.
CASH-BASIS ACCOUNTING
The method for tracking income received and all expenditures paid, including salaries.
CASH FLOW
The change in the firm’s cash account during a given
accounting period. Positive cash flow (more cash received than disbursed) results in an increase in the cash account; conversely, negative cash flow decreases the cash account.
CASH FLOW STATEMENT
A statement prepared to analyze the sources and applications of a firm’s cash during a given accounting period.
CENSURE
A public reprimand issued by a jurisdictional registration board (or other administrative agency) for
violation of professional conduct rules in that jurisdiction or by the AIA for violation of its Code of Ethics and Professional Conduct. See also Admonition.
CERTIFICATE FOR PAYMENT
A written representation from the architect, based on the architect’s evaluation of the work and the data comprising the contractor’s payment application, that the work has progressed as represented and the quality is in accordance with the contract documents.
CERTIFICATE OF MERIT
An affidavit required by some states precedent to filing suit against a design professional;
prepared by a third-party design professional attesting to the factual basis of the negligent act; intended to protect against baseless claims.
CERTIFICATE OF OCCUPANCY
Document issued by a governmental authority certifying that all or a designated portion of a building is approved for its designated use.
CERTIFICATE OF SUBSTANTIAL COMPLETION
A certificate prepared by the architect on the basis of an inspection
(a) stating that the work or a designated portion thereof is substantially complete and is usable for the intended purpose;
(b) establishing the date of substantial completion;
(c) stating the responsibilities of the owner and the contractor for security, maintenance, heat, utilities, damage to the work, and insurance; and
(d) fixing the time within which the contractor shall complete the items listed therein. Multiple certificates are commonly issued for designated portions of a project.
CHANGE ORDER
An amendment to the construction contract signed by the owner, architect, and contractor authorizing a change in the work, an adjustment in the contract sum or the contract time, or both.
CHANGE ORDER REQUEST
A request by the contractor for implementing a change in the work that may change the contract sum, the contract period of performance, or both. See also Proposal request.
CHARGEABLE TIME
Time that is charged to projects (direct time) which may or may not be invoiced to the client (i.e., the time is necessary to produce the services contracted, but if not invoiced will not result in revenue).
CHARRETTE
The intense effort to complete an architectural project
within a specified time or the time in which this work is done.
CIVIL ACTION
A lawsuit in court seeking enforcement or
protection of private rights.
CLAIM
A demand for money, services, or property based upon a right usually found in contract or by operation of law. In a claims-made insurance policy, coverage is triggered by reporting a claim made during the policy period, such as a demand for money or services made by a client accompanied by an allegation of a wrongful act.
CLAIM EXPENSE (INSURACE)
The cost associated with the handling of a claim, such as defense attorney fees, investigation costs, and expert witnesses, as defined in the insurance policy.
CLAIMS-MADE POLICY
A liability insurance policy that provides coverage only (a) if the claim is first made during the term of the policy, and
(b) if the services from which the claim arose were performed during the policy period or after the retroactive date otherwise specified in the policy.
See also Retroactive coverage and Occurrence policy.
CLARIFICATION DRAWING
A graphic interpretation of the drawings or other contract documents issued by the architect.
CLERK OF THE WORKS
Variously used to refer to the owner’s inspector or owner’s site representative. The term is not in common use today.
CLIENT
A person or entity being provided professional services by the architect. The client includes those who own or lease assets relevant to the services being provided and can include persons or entities that use, operate, and maintain those assets. In the contractual context, the term “owner” is used to signify the person or entity entering into the agreement with the architect or contractor. See also Owner.
CERTIFICATE OF INSURANCE
document issued by an authorized representative of an insurance company stating the types, amounts, and effective dates of insurance for a designated insured for the benefit of the certificate holder.
CLOSED SPECIFICATIONS
Specifications stipulating the use of specific or proprietary products or processes without provision for substitution.
CODE ENFORCEMENT OFFICIAL
A representative of a governmental authority employed to inspect construction for compliance with applicable codes, regulations, ordinances, and permit requirements. See also Authority having jurisdiction.
CODES
Government regulations, ordinances, or statutory
requirements relating to building construction and
occupancy, generally adopted and administered for the protection of public health, safety, and welfare.
COINSURANCE
An insurance policy provision that requires the
insured to carry insurance equal to a named percentage of the actual cash value or replacement cost value of the property covered by the policy or suffer a penalty in the event of a loss. This penalty reduces the amount paid by the insurance company in direct proportion to the amount by which the property is underinsured.
COMMERCIAL GENERAL LIABILITY INSURANCE
A broad form of liability insurance covering claims for bodily injury and property damage that combines, under one policy, coverage for business liability exposures (except those specifically excluded) and new and unknown hazards that may develop.
Commercial general liability insurance automatically includes contractual liability coverage for certain types of contracts and personal injury coverage. Products liability and completed operations liability are included as well. This policy may be written on either an occurrence form or a claims-made form. See also Claims-made policy and
Occurrence.
COMMISSIONING
A process for achieving, validating, and
documenting that the performance of the completed
building and its systems meet the design requirements.
(Traditionally, “commissioning” has referred to the process by which the heating, ventilation, and air-conditioning systems of a building were tested and balanced according to established standards prior to acceptance by the building owner. However, the scope of commissioning is being broadened to encompass other systems.)
COMPARATIVE NEGLIGENCE
The proportional sharing of liability between a plaintiff and defendant for damages based on the percentage of negligence of each. Not all states allow a sharing of liability based on comparative negligence.
See also Contributory negligence.
COMPENSATION
(1) Payment for services rendered or products or materials furnished or delivered;
(2) payment in satisfaction of claims for damages incurred;
(3) salary, bonus, profit sharing, and other income received by a firm owner or employee.
COMPENSATORY DAMAGES
Damages awarded to compensate a plaintiff for his or her injuries; includes direct out-of-pocket losses as well as compensation for pain and suffering.
COMPLETED OPERATIONS INSURANCE
Liability insurance coverage for injuries to persons or damage to property occurring after an operation is completed
(a) when all operations under the contract have been completed or abandoned,
(b) when all operations at one project site are completed, or
(c) when the portion of the work out of which the injury or damage arises has been put to its intended use by the person or organization for whom that portion of the work was done. Completed operations insurance does not apply to damage to the completed work itself.
COMPLETION BOND
Bond guaranteeing the lender that the project will be completed free of liens.
CONDITIONS OF THE CONTRACT
Those portions of the contract documents that define the rights and responsibilities of the contracting parties and of others involved in the work. The conditions of the contract include general conditions, supplementary conditions, and other conditions.
CONFORMED CONSTRUCTION DOCUMENTS
Construction documents revised to reflect all changes issued by addenda during bidding prior to the start of construction.
ADDITIONAL SERVICE to the architect’s basic services.
CONSENT OF SURETY
Written consent of the surety on a performance bond, payment bond, or both to changes in the contract, reductions in the contractor’s retainage, transfer of final payment to the contractor, or waiver of notification of contract changes.
The term is also used with respect to an extension of time in a bid bond.
CONSEQUENTIAL LOSS
Loss not directly caused by damage to property but that may arise as a result of such damage (e.g., damage to other portions of a building or its contents due to roof leaks).
CONSTRUCTION BUDGET
The sum established by the owner as available for construction of the project, including contingencies for bidding and for changes during construction. See also Project budget.
CONSTRUCTION CHANGE DIRECTIVE
A written order prepared by the architect and signed by the owner and architect that directs a change in the work and states a proposed basis for adjustment, if any, in the contract sum or contract time, or both.
CONSTRUCTION CONTRACT ADMINISTRATION SERVIECS
Services for the architect’s general administration of the construction contract(s). This includes reviewing and certifying amounts due the contractor, reviewing the contractor’s submittals, preparing change orders, making site visits to observe progress of the work, and conducting site inspections to determine dates of substantial completion and final completion.
CONSTRUCTION COST (COST OF THE WORK)
(1) For the purpose of preparing cost estimates, or as used for calculating the architect’s compensation, the total actual or estimated cost to the owner to construct all elements of the project designed or specified by the architect, including contractor’s general conditions costs, overhead, and profit. It does not include compensation of the architect and the architect’s consultants or the costs of the land, rights-of-way, contingencies for changes in the work, financing, or other costs that remain the responsibility of the owner.
(2) In a cost reimbursement construction contract, all allowable costs necessarily incurred by the contractor in properly performing the work.
See Costreimbursement construction contract.
CONSTRUCTION DOCUMENTS
Drawings and specifications prepared by the architect setting forth the requirements for the construction of the project.
CONSTRUCTION DOCUMENTS SERVICES
The phase of the architect’s services in which the architect prepares the construction documents from the approved design development documents and assists the owner in the preparation of the bidding documents.
CONSTRUCTION MANAGEMENT
Services provided to an owner to manage a project during the design phase, construction phase, or both.
Such services may include advice on the time and cost consequences of design and construction decisions, scheduling, cost control, coordination of contract negotiations and awards, timely purchasing of critical materials and long-lead-time items, and coordination of construction activities.
CONSTRUCTION MANAGER
An individual or entity that provides construction management services. This entity may remain as adviser (CMa) during construction or become the construction contractor (CMc).
CONSTRUCTION PROCUREMENT SERVICES
Services in which the architect assists the owner in obtaining either competitive or negotiated proposals and assists the owner in awarding and preparing contracts for construction.
CONSULTANT
A person or entity who provides advice or services.
CONTINGENCY ALLOWANCE
A sum included in the construction budget and project budget to cover unpredictable or unforeseen items of work or changes in the work.
CONTINGENT AGREEMENT
An agreement, generally between an owner and an architect, in which some portion of the architect’s compensation is contingent upon some specially prescribed condition such as government approvals or the owner’s success in obtaining funds for the project.
CONTINGENT LIABILITY
Liability that is not absolute and fixed but dependent on the occurrence of some uncertain future event or the existence of an uncertain specified condition.
CONTRACT
A legally enforceable agreement between two or
several parties that creates an obligation to do or not to do a particular thing. It also refers to the document that describes the agreement of the parties with the terms and conditions, and which serves as evidence of the obligation.
See also Agreement and Contract documents.
CONTRACT AWARD
A communication from an owner accepting a bid or negotiated proposal. An award creates legal
obligations between parties.
CONTRACT DOCUMENTS
The documents that form the contract for construction between the owner and the contractor.
These include the agreement form signed by owner and contractor; conditions of the contract (general, supplementary, and other conditions); drawings, specifications, and addenda issued prior to execution of the contract; other documents listed in the agreement; and modifications issued after execution of the contract.
CONTRACT SUM
The sum stated in the owner-contractor agreement that is the total amount payable by the owner to the contractor for the performance of the work under the contract documents.
CONTRACT TIME
The period of time allotted in the contract documents for substantial completion of the work, including authorized adjustments thereto. If a number of days is specified, calendar or working days should be stipulated.
CONTRACTING OFFICER
In government contracts, the person designated as the official representative of the owner with specific authority to act on the owner’s behalf in connection with a project.
CONTRACTOR
(1) One who enters into a contract;
(2) in construction terminology, the person or entity responsible for performing the work under the contract for construction.
CONTRACTOR’S AFFADAVIT
A certified statement of the contractor, properly notarized or otherwise subject to prosecution for perjury if false, relating to such items as payment of debts and claims, release of liens, or similar matters requiring specific evidence for the protection of the owner.
CONTRACTOR’S PROFESSIONAL LIABILITY INSURANCE
An insurance policy that covers the contractor for claims alleging faulty design services, including design services performed by the contractor’s in-house staff, by design firms hired as subcontractors, and by design firms in joint venture with the contractor.
CONTRACTOR’S GENERAL LIABILITY INSURANCE
Insurance purchased and maintained by the contractor that insures the contractor for claims for property damage, bodily injury, or death arising from the contractor’s general negligence.
CONTRACTOR’S OPTION
The provision of the contract documents under which the contractor may select certain specified materials, methods, or systems at the contractor’s option without change in the contract sum. Example: specified acceptable manufacturers.
CONTRACTOR’S WORK PLAN
The contractor’s planning and coordination required to manage and execute the means and methods, supervision, and direction of the work necessary for constructing the project in accordance with the contract documents and consistent with acceptable industry practices.
CONTRACTUAL LIABILITY
Liability assumed by a person or entity under a contract. Indemnification or hold-harmless clauses are examples of contractual liability.
CONTRIBUTORY NEGLIGENCE
The finding that the plaintiff or claimant, by not exercising ordinary care, contributed to the injury; in some states, a plaintiff’s contributory negligence will bar the plaintiff from recovering damages. See also Comparative negligence.
COPYRIGHT
Exclusive right to control the making of copies of a work of authorship, such as design plans or other
architectural work, granted by federal statute to the author for a limited period of time.
CORPORATION
A legal entity organized under the laws of a
particular jurisdiction. The entity has a legal identity separate from the stockholders, owners, managers, officers, directors, or employees of the enterprise. A corporation is “domestic” to the state of its incorporation and “foreign” to all other states.
COST-BASED SELECTION
The procurement of professional design services based solely on the cost for those services.
COST-BENEFIT ANALYSIS
An evaluation technique in which the total expected costs and the total expected benefits of one or more actions are compared in order to choose the most effective option.
COST-PLUS-FEE AGREEMENT
An agreement under which the contractor (in an agreement between owner and contractor) or the architect (in an agreement between owner and architect) is reimbursed for stipulated direct and indirect costs of performance of the agreement and, in addition, is paid a fee for services.
COST REIMBURSEMENT CONSTRUCTION CONTRACT
Any agreement where a contractor is reimbursed its incurred costs. Costs may be limited by a guaranteed maximum price (GMP; AIA Document A102™–2007), or guided only by an estimate and the contractor’s obligation to perform in good faith (A103™–2007). The owner typically has the right to audit the contractor’s accounts. The contractor’s fee may be a fixed amount or a percentage of the construction costs. In a GMP contract, the contractor may be incentivized to control costs by the opportunity to share with the owner, as additional profit, savings realized below the GMP amount. See also Time and material contract.
COUNTERCLAIM
A defendant’s claim against the plaintiff. A counterclaim that arises from the same transaction or
occurrence as the plaintiff’s claim, is considered
compulsory. Under federal rules of procedure, such
counterclaims must be made in the defendant’s response to the plaintiff’s complaint and may not be raised in a separate lawsuit.
COVENANT
A written, signed agreement between two or more
parties pledging that something is done, shall be done, or shall not be done (e.g., a covenant not to sue).
CRITICAL PATH METHOD (CPM)
A scheduling method in which all events expected to occur and operations to be performed in completing a given process are rendered in a form permitting determination of the optimum sequence and duration of each operation.
CURRENT EARNINGS
The net dollar amount after all distributions have been made and all applicable taxes have been deducted.
DAILY BILLING RATE
A rate established for billing for services of identified personnel on a per-day basis.
DAMAGES
The amount claimed or allowed as compensation for
injuries sustained or property damaged through the wrongful acts, negligence, or breach of contract of another.
DATE OF AGREEMENT
The date an agreement is made or when it is effective. If not stated in the agreement, it is the date on which the agreement is signed by the last person or entity.
DATE OF COMMENCEMENT OF THE WORK
The date established in a notice to the contractor to proceed or, in the absence of such notice, the date of the contract for construction or such other date as may be established therein. See Notice to proceed.
DECLARATORY JUDGMENT
The order of a court that establishes the rights of parties on a question of law or on a contract.
DEDUCTIBLE (INSURANCE TERMINOLOGY)
A provision requiring the insured to pay a specified portion of the loss on each claim. Deductibles may be as low as $1,000. Increasing the deductible lowers the premium cost.
DEFAULT
The omission of or failure to perform a legal or
contractual duty.
DEMURRAGE
A charge for time exceeding that allowed for loading, unloading, or removing goods shipped or delivered from a railroad car or similar vehicle or location.
DEPOSIT FOR BIDDING DOCUMENTS
Monetary deposit required to obtain a set of bidding documents.
DEPOSITION
Pretrial testimony of a fact or expert witness in the form of oral questions and answers by a party or witness. Depositions are taken under oath and may be used during a trial or arbitration proceeding.
DEPRECIATION
The reduction in value of a long-term (fixed) asset that occurs over a stated period of time known as the “useful life” of the asset, after which the asset retains only a salvage value. This reduction in value may result from lapse
of time, obsolescence, deterioration, wear, or consumption and is recorded periodically as an expense to the firm. The amount of depreciation that may be taken as a deduction for tax purposes may have no relation to any actual decrease in value or usefulness; consequently, depreciation rates vary
depending on whether they are being used for income tax purposes, other types of taxes, or management in planning capital expenditures or establishing credit.
DESIGN-BUILD
A method of project delivery in which the owner contracts directly with a single entity that is responsible for both design and construction services for a construction project.
DIRECT EXPENSE
All items of expense directly incurred for or specifically attributable to a particular project, assignment, or task.
DIRECT LABOR (SALARY)
Represents the time charged to projects, whether invoiced or not.
DIRECT PERSONNEL EXPENSE (DPE)
Direct salaries of all the architect’s personnel engaged on the project and the portion of the cost of their employee benefits related thereto.
DIRECT SALARY EXPENSE (DSE)
Direct salaries of all the architect’s personnel engaged on the project, excluding the cost of fringe benefits (payroll burden)
DISCOVERY (IN LAW)
The process by which parties or witnesses in a lawsuit are required before trial to isclose evidence that they possess in relation ot issues in the lawsuit.
DIVIDEND
In an ongoing corporation, a payment to
shareholders out of net income (profits). Payment is in proportion to the number of shares held and is usually made either in cash or in stock.
DOUBLE-ENTRY BOOKKEPING
A system of keeping books of an account in which there are always two entries, a debit and a credit, for every transaction.
DUAL OBLIGEE BOND
A bond in which two obligees are identified, either of whom may enforce the bonded obligation. An example is a performance bond furnished by a contractor in which the entity providing the financing is named as an obligee along with the owner.
EARNED REVENUE
Revenue for which services have been
rendered by the architect and for which payment from the client may be rightfully claimed. Earned revenue may be unbilled, billed but uncollected, or billed and collected.
ERRATA SHEET
An attachment to a deposition transcript
containing the deponent’s corrections upon reading the transcript and the reasons for those corrections.
ESTOPPEL
A legal bar that prevents a person from asserting a legal position because of his or her own conduct or for some other reason created by operation of law.
EXCESS LIABILITY INSURANCE
A separate insurance policy that
provides higher limits of liability than the coverage provided by a scheduled list of underlying insurance policies. The terms of the excess liability insurance are never broader than the underlying policy.
EXCLUSIONS
A list in an insurance policy or bond of losses, hazards, or circumstances not included within the scope of coverage of the policy or bond.
EXPENDITURE
A commitment by the firm to incur a cost on behalf of the firm.
Capital expenditures result in the cost being capitalized—that is, established as an asset.
Expenditures that are not to be capitalized become expenses in the period in which they generate revenue.
EXPENSE ONLY CLAIM
A claim that results only in claim expenses being incurred by the insurance company; no indemnity
payment is made.
EXPERT WITNESS
A witness who, by virtue of experience,
training, skill, or knowledge of a particular field or subject, is recognized as qualified to render an informed opinion on matters relating to that field or subject.
EXPOSURE
Estimate of the probability of loss from some hazard, contingency, or circumstance;
also used to signify the estimate of an insurer’s liability under a policy from any one loss or accident or group or class thereof.
EXPRESS WARRANTY
An explicit affirmation of fact or promise.
Any description of materials or equipment, or a sample or model, furnished by or agreed to by the warrantor can create an express warranty.
EXTENDED COVERAGE INSURANCE
Property insurance endorsement that extends the perils covered beyond basic causes such as fire and lightning to include windstorm, hail, riot, civil commotion, explosion (except steam boiler), aircraft, vehicles, and smoke.
EXTENDED REPORTING PERIOD
The time period beyond the expiration of the original policy term in a claims-made policy during which an insured may report claims from acts that occur within the original policy term and thereby obtain coverage for such claims. See Tail coverage (insurance).
FACILITY LIFE CYCLE
The series of stages or increments through which a building facility passes during its lifetime.
Stages can be structured in various ways. One example includes planning, entitlement, design, construction, move-in, use and operation, and disposal.
FACILITY PLANNING
Planning for the long-term use of a building or buildings, which may include furnishings, equipment, operations, maintenance, renovation, expansion, and life cycle planning.
FACT WITNESS
A person with personal knowledge about what happened on a project who gives testimony only as to those facts, as distinguished from an expert witness, who may provide an opinion.
FAITHFUL PERFORMANCE
Performance of contractual duties with
reasonable skill and diligence.
FAST TRACK
A process in which certain portions of the architect’s design services overlap with construction activities in order to expedite the owner’s occupancy of all or a portion of the project.
FEASIBILITY STUDY
A detailed investigation and analysis
conducted to determine the financial, economic, technical, or other advisability of a proposed project.
FIDELITY BOND
A surety bond that reimburses an obligee named in the bond for loss sustained by reason of the dishonest acts of an individual or entity covered by the conditions of the bond.
FINAL APPLICATION FOR PAYMENT
The contractor’s formal request for the remaining balance of project funds allocated in the contract, submitted on the directive of the architect after final completion has been determined.
The final application for payment is submitted after or contemporaneously with the processing of the final change order.
FINAL CHANGE ORDER
A change order to the contract for
construction, executed prior to or contemporaneously with the contractor’s final application for payment, that reconciles outstanding contract cost liabilities and variables such as allowances, contingencies, shared savings, penalties, bonuses, or outstanding additional services costs due the architect.
FINAL COMPLETION
Term denoting that the work has been
completed in accordance with the terms and conditions of the contract documents, all contract requirements for project closeout have been satisfied, and the architect’s certificate for payment of the contractor’s final application for payment has been sent to the owner.
FINAL INSPECTION
Final review of the construction by the
architect to determine whether final completion has been achieved; performed prior to submittal of the contractor’s final application for payment and issuance of the architect’s final certificate for payment.
FINAL PAYMENT
Payment made by the owner to the contractor, upon issuance by the architect of the final certificate for payment, of the entire unpaid balance of the contract sum as adjusted by the final change order.
FISCAL YEAR
Any period of 12 consecutive months that is used as the basis for budgeting or for reporting financial activity.
The period may coincide with the calendar year or it may begin on any day of the year and close on the last day of the succeeding 12-month period.
FIXED ASSETS
Assets of a tangible, physical, and relatively permanent nature (such as furniture, equipment, buildings,
and automobiles) that are used in the operation of a business and that will not be consumed within one year.
FIXED LIMIT OF CONSTRUCTION COST
A term used in some pre- 2007 AIA owner-architect agreements to identify the maximum construction cost that could be obtained by bid or proposal without requiring that the architect redesign the project at its own expense to lower the construction cost.
FORCE ACCOUNT
A time and materials–based method for
computing the cost of the work, wherein predetermined rates are typically applied to time expended for labor, material, and equipment, plus factors for insurance, taxes, and an agreed percentage for overhead and profit;
sometimes used to describe work performed by the owner’s own forces when completing the work.
See also Time and material
(T&M) contract.
FORCE MAJEURE
A control-based principle used to allocate the risk of time-impacting events in order to ensure that neither party is responsible for losses caused by uncontrollable risks.
FRINGE BENEFITS
Benefits paid for by an employer on behalf of an employee in addition to direct compensation; frequently includes health care, retirement, and disability insurance.
FRIVOLOUS SUIT
A lawsuit having no legal basis, often filed to harass or extort money from the defendant.
See also Certificate of merit.
