Resources/Glossary
Contractor glossary
Sixty words that come up on every job, from allowance to zoning. Short definitions, real examples and links to the free tools that go with them.
A budget line in an estimate or contract for an item the client hasn't picked yet, such as tile or light fixtures. If the final choice costs more or less, the difference is usually settled with a change order.
Drawings updated at the end of a job to show what was actually built, including changes made in the field. They help the next person who works on the house.
A cost one party charges back to another, for example a general contractor billing a subcontractor for cleanup or repair the sub was responsible for.
A price offered to do a defined scope of work. Contractors often use bid, quote, estimate and proposal loosely; the contract wording is what counts.
Permission from a city or county to do construction work. Permits usually come with inspections at set stages. Some places require a state license number before a permit is issued; see the license guides.
A one-page summary from an insurer showing a company's coverage types, limits and policy dates. Clients, general contractors and some licensing boards ask for one.
A written, signed change to the agreed scope, price or schedule after the contract is signed. In ECHOPS, a signed change order bills itself as its own invoice. Get the free change order template.
The end-of-job steps: final walkthrough, punch list, final invoice, lien waivers, warranty paperwork and handing over manuals and as-builts.
Money set aside in a budget for unknowns, such as rot behind a wall. It may be shown to the client or kept inside the price, depending on the contract.
A Federal Trade Commission rule that gives buyers three business days to cancel many sales made at their home for $25 or more. Many states add their own cancellation rights for home improvement contracts.
A contract where the client pays the actual cost of labor and materials plus a fee, either a percentage or a fixed amount. It needs clear cost records the client can review.
Software that tracks leads, customers and every conversation with them, so nobody falls through the cracks. ECHOPS includes a CRM built for remodelers and trades.
Money paid when a contract is signed, before work starts. Some states cap the deposit on home improvement contracts; check your state in the license guides.
A way of working where one company handles both the design and the construction of a project under one contract.
A plan for paying a contract in parts as stages of work are finished, for example deposit, rough-in, cabinets installed and final. Also called progress payments.
A legally recognized electronic signature on a contract or document. ECHOPS e-sign works on any PDF, with up to six signers and a signing certificate that records who signed, how, when and where.
A contractor's calculation of what a job will cost and what to charge for it. Use the free estimate template.
Software for scheduling, dispatching and tracking work done at customers' locations, such as service calls and repairs.
A last inspection of the finished job with the client to agree on anything still to fix, which goes on the punch list.
The company that contracts with the owner and is responsible for the whole job, usually hiring and coordinating subcontractors.
Profit as a share of the selling price: (price − cost) ÷ price. A job priced at $15,000 that costs $10,000 has a 33.3% gross margin. Try the markup and margin calculator.
A contract to repair, remodel or improve an existing home. Many states set rules for what it must include, such as license number, price, start and finish dates and a cancellation notice.
A visit by a building official to check that work meets code before it's covered up or the job is closed.
A bill sent to the client for work done or a payment stage reached. ECHOPS builds invoices from the payment plan, so deposit, progress and balance bills match the contract.
Tracking the actual labor, materials and other costs of each job against its estimate, so you know which jobs made money.
What an employee costs beyond the hourly wage: payroll taxes, workers' compensation, benefits and paid time off. Work it out with the labor rate calculator.
A potential customer who has asked about your services, by form, call, text, email or a lead service.
How long it takes for ordered materials, such as cabinets or windows, to arrive after you order them.
A surety bond some states require before issuing a contractor license. It protects consumers and the state, not the contractor.
A document in which a contractor, sub or supplier gives up lien rights for amounts paid. Some states require exact statutory forms, including Arizona, California, Georgia, Massachusetts, Michigan, Mississippi, Missouri, Nevada, Texas, Utah and Wyoming. See the lien waiver template.
A contract for one fixed price for the whole scope. Also called a fixed-price contract.
The amount added to cost to set a price, as a share of cost: (price − cost) ÷ cost. A 50% markup equals a 33.3% margin, not 50%. Try the markup and margin calculator.
A list of every material and quantity needed for a job, measured from plans or the site. It feeds the estimate and purchase orders.
A legal claim against a property by an unpaid contractor, subcontractor or supplier. Deadlines and notice rules vary by state, and unlicensed contractors often lose lien rights.
Payment terms meaning the invoice is due 30 days after its date.
Business costs that aren't tied to one job, such as rent, vehicles, insurance, software and office staff. Every job's price has to cover its share.
A property owner who acts as their own general contractor. Many states let owners skip the contractor license for work on their own home, with limits.
How a contract price is split into payments, such as a deposit, progress payments and a final balance. In ECHOPS, payment plans can be by stage or through lender financing.
A saved list of the items and services you sell, with costs and prices, so estimates are fast and consistent. ECHOPS price book items can be priced by size, unit or allowance, with cost parts, markups and waste.
Invoicing as stages of work are completed instead of all at the end, often tied to a schedule of values or draw schedule.
A document that presents your scope, price, options and terms to a client for approval. Use the free proposal template.
A list of small items to fix or finish before a job is complete, usually made at the final walkthrough.
A document sent to a supplier to order specific materials at agreed prices.
A fixed price for a defined scope, usually valid for a set time. In ECHOPS, quotes go out as links with open tracking and e-sign.
Part of each payment held back until the job is complete, to make sure punch list work gets done. It's often 5% to 10%, and some states cap it.
A written question sent to the designer or client to clear up something unclear in the plans or scope.
The stage when plumbing, electrical and HVAC lines are run before walls and ceilings are closed. It's usually inspected before drywall goes up.
A breakdown of the contract price by work item, used to bill progress payments.
A written description of exactly what's included in a job, and often what isn't. A clear scope heads off many disputes before they start.
The finishes and fixtures the client chooses, such as cabinets, counters, tile and faucets. Get the free kitchen and bath selections sheet.
A visit to diagnose or fix a problem, often for an existing customer or under warranty. ECHOPS tracks service calls with statuses, warranty dates and a route planner.
In roofing and siding, 100 square feet. A 3,000 square foot roof is 30 squares.
A company or tradesperson hired by the general contractor to do part of a job, such as plumbing or tile.
The point where the work is finished enough for the owner to use it as intended, even if small punch list items remain. Contracts often tie final payment and warranty start to it.
A contract where the client pays for actual hours at an agreed rate plus materials, often with a markup. Some states require a cost estimate or cap on T&M home improvement contracts.
A price per unit of work, such as per square foot of tile or per linear foot of trim, multiplied by the measured quantity.
A promise to fix defects in work or materials for a set time. ECHOPS counts warranty from each job's completion date.
An instruction for a specific task, given to a crew member or subcontractor, with the details they need to do it.
Insurance that pays medical costs and lost wages for employees hurt on the job. Most states require it once you have employees.
Local rules on how land can be used and what can be built where, such as setbacks and height limits. Zoning approval can be needed before a building permit.
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An RFI, or request for information, is a written question a contractor sends to the designer, engineer or owner when something in the plans, specs or scope is unclear. The written answer becomes part of the job record, and if it changes the work or the price, a change order should follow before the work does.
MEP stands for mechanical, electrical and plumbing: the heating and cooling, wiring and piping in a building. On a remodel, MEP rough-in is the stage when those lines are run before walls close, and it’s usually inspected before drywall. MEP work often needs licensed trades. Rules vary by state and this isn’t legal advice; see the license guides.
A submittal is a document or sample a contractor sends to the architect, engineer or owner for approval before installing something: shop drawings, product data sheets, samples or mockups. It shows that what you plan to install matches the plans and specs. On a home remodel, a signed selections sheet does a similar job for finishes and fixtures.
GMP means guaranteed maximum price: a cost-plus contract with a ceiling. The owner pays actual costs plus the contractor’s fee up to that cap, and the contractor usually covers costs above it unless the scope changes by change order. Some GMP contracts split any savings. This isn’t legal advice, and contract rules vary by state; see the license guides.
A takeoff is a list of every material and quantity a job needs, measured from the plans or the site: counts, lengths, areas and volumes. It feeds the estimate and the purchase orders. In ECHOPS, you measure lengths, areas and counts on the plan and send the quantities to the quote, where the price book prices them by size, unit or allowance with markups and waste. How to estimate construction costs covers the steps.
A few you’ll see often: RFI (request for information), MEP (mechanical, electrical and plumbing), GMP (guaranteed maximum price), CO (change order), COI (certificate of insurance), SOV (schedule of values), T&M (time and materials), PO (purchase order) and GC (general contractor). Each one is explained on this page, so the construction jargon on your next set of plans reads plainly.
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