Construction quoting terms, explained plainly

B

Baseline

The original programme dates, kept for comparison when the live dates move so delays are visible and explainable.

Bill of quantities (BOQ)

An itemised list of the measured work with quantities and units, priced line by line. Common on larger and commercial tenders, prepared to a standard method such as NRM2 or SMM7.

Building Regulations

The technical standards new work must meet — structure, fire, insulation, drainage, electrics. Work is either inspected by building control or self-certified by a competent-person scheme member.

C

CIS (Construction Industry Scheme)

HMRC's scheme under which contractors deduct tax (20% for registered, 30% for unregistered subcontractors) from payments for labour and pay it to HMRC. Materials aren't deducted. The contractor must file a monthly CIS return.

Contingency

Money set aside in a budget for the unexpected. It belongs to whoever holds it — make clear whether the contingency is the client's or built into your price.

COSHH assessment

Control of Substances Hazardous to Health — an assessment of the risks from substances used on site (cement, solvents, dust) and the controls needed.

D

Day rate

What a trade charges for a day's labour. Labour packages are usually built as days × day rate; EstiMate lets you set your own rates per trade so AI drafts price labour the way you do.

Defects liability (rectification) period

A period after completion — often 6 or 12 months — during which the contractor must return to fix defects that appear. The remaining retention is released at its end.

Deposit

A payment before work starts, usually a percentage of the quote, to cover early materials and secure the start date. Consumer law limits what you can keep if the client cancels, so put terms in writing.

Domestic Reverse Charge invoice

A VAT invoice under the construction reverse charge showing the VAT rate but no VAT amount charged, with wording that the customer must account for the VAT to HMRC.

E

Estimate

An approximate price for work, given before the scope is fully fixed. In the UK an estimate is not usually binding — the final price can differ — which is why builders should quote once the scope is agreed.See also: Quotation

Exclusions

Items explicitly not in the price — decorating, kitchen supply, building control fees. Listing them is as important as listing what's included.

F

Final account

The agreed final cost of the works at the end of the contract: the original sum plus or minus variations, provisional sum adjustments and any claims.

G

Gantt chart

A bar chart of tasks against time showing when each stage starts and finishes and what depends on what.

I

Interim valuation

On a contract with monthly payments, an assessment of the value of work done to date, less what's been paid, giving the amount now due. Used with retention on JCT and NEC contracts.

J

JCT contract

The Joint Contracts Tribunal family of standard UK building contracts — from the Home Owner contract and Minor Works up to Design and Build. They set out payment, variations, delays and dispute terms.

L

Letter before claim

The formal letter demanding payment of a debt before court action, required by the Pre-Action Protocol. It sets out the amount, the basis and a deadline, and usually claims statutory interest.

M

Margin

Profit as a percentage of the selling price. £25 profit on a £125 sale is a 20% margin. The same money is a 25% markup — quoting confuses the two constantly, which is why EstiMate shows both.

Markup

A percentage added to a cost to arrive at the selling price. 25% markup on £100 of materials gives a £125 sell price.

N

NCR (non-conformance report)

A record that work or materials don't meet the specification, what was done about it and who signed it off.

NEC contract

The New Engineering Contract, a family of collaborative standard forms used widely on public and infrastructure work, with early-warning and compensation-event mechanisms.

O

Overhead

The costs of being in business that aren't tied to one job: vehicles, insurance, phones, software, office, accountant. They have to be recovered across every quote through the margin.

P

Party Wall Act

The law requiring notice to neighbours before work on or near a shared wall or boundary, or excavation near their foundations. Notices and awards take time — build them into the programme.

Permit to work

A formal written authorisation for high-risk tasks — hot works, confined spaces, working at height — setting the conditions under which they may be done.

Plant

Machinery and heavy equipment used on site — diggers, dumpers, telehandlers, compressors. Usually priced by the day or week with delivery and fuel.

Practical completion

The point at which the works are complete enough for the client to use them, apart from minor snags. It usually triggers the release of half the retention and the start of the defects period.

Preliminaries (prelims)

Costs of running the job that aren't a specific trade: site set-up, welfare, scaffold, skips, temporary works, supervision, insurance. Forgetting prelims is the commonest way a quote loses money.

Prime cost (PC) sum

An allowance for the supply of a specific item the client will choose later, such as tiles or sanitaryware, at a stated budget. Labour to fit is priced separately.

Programme of works

The planned sequence and dates of the stages of a job, often shown as a Gantt chart. Sharing it with the client sets expectations and records delays.

Provisional sum

An allowance in the quote for work that can't be priced accurately yet — for example unknown ground conditions or an undecided kitchen. It's adjusted to the actual cost once the work is defined.

Q

Quotation (quote)

A fixed price for a defined scope of work. Once the client accepts it, it forms the basis of the contract; changes are handled as variations rather than by re-pricing the whole job.See also: Estimate, Variation

Quote memory

EstiMate's record of every material price, labour package and margin this business has quoted — won, open or didn't win — used to make AI drafts and price suggestions match how the business actually prices.

R

RAMS

Risk Assessment and Method Statement: the document that identifies the hazards of a task and sets out how it will be done safely. Routinely required on commercial sites and good practice everywhere.

Retention

A percentage (commonly 3–5%) held back from each payment until practical completion, with half released then and the rest after the defects period. Chase it — a lot of retention is never claimed.

RFI (request for information)

A formal question to the designer or client to resolve a gap or conflict in the drawings or specification. Recording RFIs and answers protects you when the design changes.

S

Scope of works

The written description of what is and isn't included in the price. The best protection against 'I thought that was included'.

Site diary

A daily record of weather, workforce, deliveries, work done, visitors and problems. In a dispute, the diary is the evidence.

Snagging

The list of small defects to be fixed before handover — a scratched door, a missed sealant joint. Snagging software pins each item to a drawing or photo, assigns it and tracks it to sign-off.

Stage (milestone) payments

Payments due when defined stages are reached — footings, watertight, first fix, completion. They keep cashflow positive on longer jobs and are tracked and chased automatically in EstiMate.

Statutory interest (late payment)

Under the Late Payment of Commercial Debts Act, businesses can charge 8% above the Bank of England base rate on overdue business-to-business invoices, plus fixed compensation of £40–£100 per invoice.

Subcontractor

A separate business engaged by the main contractor to carry out part of the works. Paid against a subcontract with its own scope and payment terms, often under CIS.

T

Take-off

Measuring quantities from drawings and specifications — areas, volumes, lengths and counts — so they can be priced. AI take-off does this measuring from uploaded drawings for the estimator to check.

Toolbox talk

A short, recorded safety briefing to the workforce on a specific topic before work starts.

U

Upsell / optional extra

An item offered on the quote at a price the client can choose to add — a bigger skylight, a smart thermostat. In EstiMate clients tick extras on the quote link and the total updates before they accept.

V

Variation (variation order)

A change to the agreed scope — added work, omitted work or a change in specification — priced and approved before it's done so it can be paid for. Also called additional works or a change order.

VAT reverse charge (construction)

Since March 2021, for most VAT-registered business-to-business construction supplies reported under CIS, the customer accounts for the VAT rather than the supplier. The invoice must state that the reverse charge applies.

Z

Zero-rated and reduced-rate VAT

Some building work is charged at 0% VAT (most new dwellings) or 5% (certain conversions and renovations of empty homes, energy-saving measures). Getting the rate right matters on the quote.

Want the numbers to go with the words? Try the free trade calculators or read the blog.