Contractor bid glossary

The words on a bid, explained the way you would to a new hire. Short answer first, then what it means on the job.

Estimate: A contractor's written approximation of what a job will cost, given before the work starts. Not a fixed price unless it says so.
Quote: A fixed price for a defined scope of work, good for a stated period. Firmer than an estimate.
Bid: A contractor's offer to do a specific job for a specific price, submitted in competition with other contractors.
Proposal: The document a contractor sends to win a job: scope, price, timeline, terms, and a place for the customer to accept.
Scope of work: The list of exactly what the contractor will do on the job, and by implication what they will not.
Exclusions: The things a bid specifically says are not included, so the customer does not assume they are.
Change order: A written addition or change to a signed job, with its own price, agreed before the extra work is done.
Allowance: A dollar amount set aside in a bid for an item the customer has not chosen yet, like tile or fixtures.
Deposit: Money the customer pays when they accept the bid, before work starts, usually to cover materials and hold the date.
Payment terms: The line on a bid that says when and how the customer pays: the deposit, any progress payments, and the balance.
Progress payment: A payment made partway through a longer job at a milestone both sides can see, like rough-in passed or framing complete.
Balance due: What is left to pay after the deposit and any progress payments, usually due when the job is done.
Due on completion: Payment terms where the whole price, or the balance, is owed the day the work is finished.
Net 30: Payment terms that give the customer 30 days after the invoice date to pay. Common in commercial work, rare and risky in residential.
Invoice: The request for payment sent after work is done, showing the total, what has been paid, and what is due.
Receipt: Confirmation that a payment was received, for the customer's records.
Markup: The percentage added to a cost to get the price. A $100 part at 30 percent markup sells for $130.
Margin: Profit as a percentage of the price, not of the cost. A $130 price on a $100 cost is a 23 percent margin.
Overhead: The costs of running the business that are not tied to one job: truck, insurance, phone, software, tools, licenses.
Labor rate: What a contractor charges per hour of work. It carries their pay, their overhead, and profit, not just wages.
Time and materials: A pricing method where the customer pays for the hours worked and the materials used, instead of a fixed price.
Fixed price: One price for the whole scope, regardless of how many hours it takes. The customer's preferred way to buy.
Unit price: A price per unit of work, per square foot, per linear foot, per sheet, used when the final quantity is not known yet.
Takeoff: Counting and measuring everything a job needs from the plans or the site: the material list behind the price.
Contingency: An amount built into a price, or set aside by the customer, for the things that go wrong that nobody can see yet.
Warranty: The contractor's written promise to fix their own work if it fails within a stated time. Separate from the manufacturer's warranty on the product.
Callback: A return trip to fix something on a finished job, usually under the warranty, usually unpaid.
Punch list: The short list of small items left to finish or fix at the end of a job, walked with the customer before final payment.
Substantial completion: The point where the work is usable for its purpose even if small items remain. Often when the big payment comes due.
Permit: The city or county's written permission to do work that affects safety or structure, followed by an inspection.
Inspection: The city's check of permitted work at set stages, like rough-in and final, before the job can continue or close.
Lead time: How long between ordering something and having it on site. Custom windows, doors, and composite decking can run weeks.
Special order: Material made or ordered specifically for the job and not returnable: custom windows, cabinets, a particular tile.
Square (roofing): A roofing unit of 100 square feet. A 20-square roof is 2,000 square feet of surface, measured on the slope.
Linear foot: Length only, with no width: how fence, gutter, trim, baseboard and countertop are measured and priced.
Cubic yard: A volume of 3 by 3 by 3 feet, 27 cubic feet. How concrete, gravel, mulch, soil and fill are ordered.
Subcontractor: A contractor hired by another contractor to do part of a job, like the electrician on a remodel run by a general contractor.
General contractor: The contractor responsible for the whole job, who hires and coordinates the trades and answers to the customer.
E-signature: Accepting a proposal by typing a name or signing on a screen instead of on paper. Legally binding in the US for this kind of agreement.
Proposal expiration: The date after which the price on a bid is no longer good, usually 30 days from the date it was sent.
Good, better, best: Giving the customer two or three options on one bid, at different prices, so they choose between yours instead of between you and someone else.
Add-on: An optional extra on a bid that the customer can tick to include, with its own price, like a gutter guard on a gutter job.
Rough-in: The stage where the pipes, wires and ducts are installed inside the walls, before drywall, and inspected.
Mobilization: The cost of getting a crew and equipment to a job and set up before any productive work happens.

Put them to work: the bidding guides, estimate templates for 24 trades, and the estimate checker.