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September 27, 2018

Most Frequently Used Abbreviations in the Construction Industry

The construction industry has its share of abbreviations, acronyms, and alphabet soup “ABCs”.  To abchelp you navigate through this bowl of letters, below are definitions of some of the most frequently used industry shortcuts:

  • AIA - The American Institute of Architects is a professional organization for architects in the United States. Headquartered in Washington, D.C., the AIA offers education, government advocacy, community redevelopment, and public outreach to support the architecture profession and improve its public image.
    • One of its most common references is the requisition (billing invoice) form, known as the AIA G702.
      AIA
  • AGC – The Associated General Contractors of America1ooyears is a national construction industry trade association representing more than 26,000 firms, including over 6,500 of America’s leading general contractors, and over 9,000 specialty-contracting firms. More than 10,500 service providers and suppliers are also associated with AGC, all through a nationwide network of chapters that negotiate labor collective bargaining agreements on behalf of its union-based members.

  • ABC – The Associated Builders and Contractors is a national construction industry trade association representing more than 21,000 members through its national office and chapters. Founded on the merit shop philosophy (non-union), ABC and its 70 chapters help members develop people, win work and deliver that work safely, ethically and profitably.  ABC's membership represents all specialties within the US construction industry and is comprised primarily of firms that perform work in the industrial and commercial sectors.  ABC's mission is the advancement of the merit shop construction philosophy, which encourages open competition and a free enterprise approach that awards contracts based solely on merit to the most qualified and responsible low bidders, regardless of labor affiliation.

  • T&MTime and Material is a billing arrangement under which a contractor is paid on the basis of (1) the actual cost of direct labor, usually at specified hourly rates times actual hours worked, (2) the actual cost of materials and equipment usage, and (3) an agreed upon fixed add-on percentage to cover the contractor's overhead expenses and provide a profit (often referred to as “Ten and Five (10% and 5%)).

  • CFMA – Founded in 1981, the Construction Financial Management Association  is the only CFMA-1organization dedicated to bringing together construction financial professionals and associated companies (for example, CPAs, software specialists, insurance agents) serving their unique needs. CFMA serves more than 8,200 members via 98 chapters located throughout the US and Canada.  CFMA’s mission statement is “To be essential to the success and growth of construction financial professionals” and is achieved via four goals:  Member Value, Chapter Relations, Companies, and External Relations.

  • PCO – A Proposed (or Potential) Change Order is a document that specifies the scope in which the contractor expects or anticipates the incurrence of extra work or additional costs. It usually results from owner directives, architecture clarifications, changes to original drawings or specifications, or unforeseen conditions incurred at the job site.

  • CO or COR – A Change Order or Change Order Request is a formal document issued when work is added to or deleted from the original scope of work in the contract. Change orders adjust the contract’s value and can be between the owner and the general contractor and/or between the general contractor and the subcontractor.

  • RFP – A Request For Proposal is a document used when a company is interested in procuring services, often through a bidding process. It is typically distributed to potential suppliers to submit business quotes or work proposals.

  • RFI – A Request For Information document is a written request from a contractor to the owner or architect (or from a subcontractor to a general contractor) for clarification or information about the contract documents during the estimating or bidding stage of the project or following contract award.

  • WIP – The Work in Process Schedule is an accounting and project management report that presents critically important information about each job under construction. A required disclosure in a company’s financial statements, the report uses projected cost TO complete (or projected cost AT completion) estimates to show the forecasted profitability (or loss) of its projects under way.  Other information garnered from a WIP Schedule include:
    • BECBillings in Excess of Cost – commonly known as “over billings”, BEC occurs when the percentage of Job to Date Billings to Revised Contract Value exceeds the percentage of Job to Date Cost to Projected Job Cost at job completion.
    • CEBCosts in Excess of Billing – commonly known as “under billings”, CEB occurs when the percentage of Job to Date Billings to Revised Contract Value is less than the percentage of Job to Date Cost to Projected Job Cost at job completion.
    • GM – Gross Margin – commonly known as job profitability for the accounting period reported, this amount, the sum of all job profits disclosed on the WIP Schedule, should agree with the amount shown on the Income Statement as Contract Revenue minus Cost of Contract Revenue.

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