MEP & construction estimating glossary
Clear definitions of the terms your team uses every day — from takeoff and BOM to retainage and value engineering.
A
Addendum
A document issued during the bidding period that modifies or clarifies the original bid documents. Addenda can change scope, specifications, or bid dates and must be acknowledged in your proposal.
AIA Pay Application
A standardized payment request form (AIA G702/G703) used in construction to document work completed, materials stored, and retainage for each billing period.
As-Built
Drawings that reflect the actual installed conditions of a project, including all changes made during construction. As-builts are typically required as a project closeout deliverable.
B
Bid Bond
A guarantee from a surety company that a contractor will honor their bid if selected. Typically 5-10% of the bid amount, it protects the owner if the contractor withdraws after bid opening.
BOM (Bill of Materials)
A structured list of all components, parts, and materials needed for a project. In MEP work, a BOM is derived from takeoff quantities and includes descriptions, quantities, units, and specifications.
C
Change Order
A formal modification to the original contract scope, price, or schedule. Change orders can be initiated by the owner, architect, or contractor and require agreement from all parties.
G
GC (General Contractor)
The primary contractor responsible for overall project execution. GCs hire subcontractors (including MEP subs) and coordinate work between trades.
L
List Price
The manufacturer's published retail price for a product before any discounts. Contractors typically receive discounted pricing from distributors based on volume and relationships.
M
Markup
The percentage added to direct costs (materials + labor) to cover overhead and profit. MEP contractors typically apply markup ranging from 10-30% depending on project type and risk.
MEP
Mechanical, Electrical, and Plumbing — the three primary building systems trades. MEP contractors design, install, and maintain HVAC, electrical distribution, plumbing, and fire protection systems.
N
Net Price
The actual cost after all discounts are applied. Net price is what the contractor pays the distributor or manufacturer, before adding markup for the client proposal.
NIC (Not In Contract)
A designation indicating that certain work or materials shown on the drawings are not included in a particular contractor's scope. NIC items are typically handled by another trade or the owner.
O
OFCI (Owner Furnished, Contractor Installed)
Equipment or materials purchased by the owner but installed by the contractor. The contractor is responsible for receiving, handling, and installing OFCI items but not for procurement or warranty.
Overhead
Indirect costs of running a contracting business that cannot be attributed to a specific project — office rent, insurance, accounting, vehicles, management salaries, and general administration.
P
Punchlist
A list of incomplete or deficient items identified near project completion that must be corrected before final acceptance. Punchlist items are typically minor but must be resolved before final payment.
R
Retainage
A percentage of each progress payment (typically 5-10%) withheld by the owner until project completion. Retainage incentivizes contractors to complete all work and punchlist items.
RFQ (Request for Quote)
A document sent to vendors or subcontractors requesting pricing for specific materials or scope of work. RFQs include specifications, quantities, delivery requirements, and response deadlines.
S
Scope of Work
A detailed description of all work, materials, and deliverables included in a contract or subcontract. A clear scope of work is essential for accurate estimating and avoiding change orders.
Shop Drawing
Detailed drawings prepared by a contractor or manufacturer showing how specific components will be fabricated and installed. Shop drawings require architect/engineer review and approval before fabrication.
Submittal
Product data, shop drawings, samples, or certifications submitted to the architect/engineer for review and approval before procurement or installation. Submittals ensure specified products are being used.
T
Takeoff
The process of measuring and counting all materials and components from construction drawings. A takeoff produces quantities that feed into cost estimating. Can be performed manually or with AI-powered tools like Aginera.
V
Value Engineering (VE)
The process of analyzing project components to find cost savings without sacrificing quality or function. VE proposals suggest alternative materials, methods, or designs that reduce cost while meeting requirements.
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