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121 Cards in this Set

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  • Back

Acceleration Cost

Cost incurred by a contractor when he must employ more manpower/hours (at the owners request or need) in order to finish the project ahead of schedule. (may not be granted if the contractor contributes to cause of delays)


Act of a person who receives something with the intention of retaining it, such intention being evidenced by a sufficient act (such as an owner selecting a bid) - (See CONTRACT)

Active Interference

Action by one party to a contract that causes the other party to not complete the contracted work on time or as established by the contract writing. Positive action must be performed by the interfering party as opposed to passive negligence.

Actual Damages (Actual Loss)

The real and true value of the total loss suffered (as opposed to liquidated damages which are estimated as anticipated loss in the future)


Formal changes or clarifications to the contract documents issued during the bid period. They become official parts of the CD's and are legally binding.

Acts of God

Events causing a project delay that are not caused by the owner or contractor. These delays result in adjustments to the contract duration but not the contract amount.

Additional Work

Construction work that was not recognized at the contract award but that must be performed in order to deliver a project as planned.

Adverse weather

Unexpected weather conditions for a particular location at a particular time of year that impede construction progress.


A public announcement to solicit bids for a construction project.

Agency Agreement

An arrangement between a principal and an agent by which the agent agrees to perform certain tasks for the principal. The principal is bound by the actions of the agent.

Liability Insurance

Part of the general insurance system of risk financing to protect the purchaser (the insured) from the risks of liabilities imposed by lawsuits & similar claims.

It protects the insured in the event he is sued for claims that come within the coverage of the insurance policy.

Strict Liability

Liability without fault -

Legal responsibility for an injury that can be imposed on the wrongdoer without proof of carelessness, negligence, ignorance or fault. (common in defective manufactured products)


General recognition and conformity to established practice:

a type, model or combination of elements accepted as correct or perfect

Caveat emptor

A caution - proclaims that the buyer must perform due diligence.

Literally: "let the buyer beware"


A person authorized by another to act for him or her.

One who is employed to represent another in business and legal dealings with third persons.

Typical relationships involve 3 parties: Principle, Agent, Third Party.

Bid Depository

A clearing house for subcontractors to submit their bids for a particular project and for prime contractors to receive bids from the various subcontractors.

Commercial Impracticability

The doctrine that recognizes that, in some instances, contract performance may become too costly/difficult (impossible) & excuses the party from performing required duties.

Supplemental Services

Services requested by the owner, which may exceed the basic services being performed. (ex: models, special renderings, videos, etc.)


Process by which CLARB formally recognizes a certificate holder's education, experience, examination & professional conduct as meeting or exceeding their standards (not national licensure, but makes reciprocity in other states easier)

A recognition that the candidate is "above average" in competency.

Hold Harmless Clause

Statement that an individual/organization is not liable for damages/injuries caused to the individual signing the contract.

Process by which one party seeks to protect itself from any claims by a plaintiff who has been injured or suffered a loss.

(similar to Indemnification which requires one party to reimburse the second party for losses/damages described in the provision)

Quality Control Group

The group of personnel assigned to implement quality control during the construction phase.

Insurance - Commercial General Liability

Personal injury on office equipment, office theft, etc.


Often required by law & contracts


Seizing property by judicial order.

A remedy by which the plaintiff acquires a lien on the property of the defendant for satisfaction of judgement.

Termination for Default

Gives a customer the right to unilaterally terminate the contractor if he fails to perform according to the specified terms.

[The contractor is generally not entitled to any payment for the unfinished part of the contract and, instead, may be liable for (1) repayment of monies advanced, (2) liquidated and other damages, and (3) excess cost incurred by the customer in completing the contract under a new contractor.]


Rreceiving satisfaction (compensation) for any injury sustained.

Certificate of Payment

Document verified by LA that the noted work has been satisfactorily completed and is approved for payment by owner.


The process of settling a contract dispute through court because both parties feel the other is 100% at fault.

Mutuality of Assent

Agreement by both parties to a contract. (established by showing and offer & acceptance)

Doctrine of Gratuitous Service

Holds that volunteered and free services carry the same duty of care as services solicited and paid for.

Observation of Construction

LA's duties during construction - implies that the contractor is primarily responsible for the construction process NOT the LA. (as opposed to "supervision", "inspection", "superintendence.")

Project Manual

Construction Package in booklet form - includes contract documents (CD's), general & technical specifications. May include smaller drawings.

Building Codes

Cover the construction, renovation, & improvements of buildings, including: fire, safety & structural requirements.


Construction Documents - drawings, specifications, other written documents

Quality Control Plan

Implementation plan for application of quality assurance (QA/QC) policies during construction phase.

Field Change Order

Document issued by the architect directing the contractor to build some portion of the project in a manner different form that described in the plans/specs. (May be requested by architect, owner, or contractor).

Issued when the modifications will not affect the contract sum or time.

Agency Shop

a business that formally agrees with a union that all employees must pay union dues weather or not the workers are union members. (Dues compensate the union for services which benefit all the workers)


An itemization of selected items of work for which bidders are asked to provide prices which will add or subtract from the base bid. (Gives owner greater flexibility.)

Alternative Dispute Resolution technique (ADR)

A means used for settling conflicts by means of an alternative procedure to formal litigation.


A well-established alternative to litigation in which the conflict is resolved by an impartial third party or an impartial panel of selected individuals.

As-Built Drawings

Project drawings that show all data concerning the actual in-place locations of all constructed items. (including anything that differs from original CD set)

Balanced Bid

A unit price bid that accurately reflects the actual anticipated price of each item of work to be performed.

Bid Bond

A surety instrument that guarantees to the owner that the bearer, if awarded the contract, will enter into a binding contract under terms of which they bid.

Bid Peddling

aka Bid Shopping

The effort by a bidder, usually a subcontractor, to determine their bid's standing relative to other bids. If the bid is not the lowest bid, they my reassess the amount originally quoted and submit a lower bid before the deadline for submittal.

Bilateral Contract

An agreement made through the mutual promise of the contracting parties.

General Conditions

aka Boilerplate

Outlines the basic rights and responsibilities roles of the parties to a construction agreement.

Provides guidance on how to handle various problems/circumstances that may arise during construction.

Bonding Capacity

The maximum amount of uncompleted construction work that a contractor can have under contract (above which no bonds will be provided).

This is the most important factor by which to prequalify a bidder.


A situation in which the general contractor subcontracts all of the work on a project.

Builders Risk Insurance

Construction insurance that provides coverage specifically for a project that is under construction. (Considered fire insurance, though other types of losses are generally covered.)

Buy American Act of 1933

Law that requires the use of US produced or mined goods unless a local shortage exists.

Calendar days

Time unit used to define the duration of construction.

Cardinal Change

A change order of such a magnitude that the original scope of the project is altered to an extent that constitutes a new contract.

Certificate of Insurance

Written document that serves as evidence that a particular insurance policy is in force.

Change Order

A directive (usually authorized in writing by the owner & agreed to by architect & contractor) to alter or modify some aspect of a project. Usually comes with adjustment to the contract amount and/or duration.

Clayton Act of 1914

Law that specifically removed unions from falling under the Sherman Anti-Trust Act (which outlaws monopolies)

Closed Shop

a business that formally agrees with a local union to hire only union members - Outlawed by 1947 Taft-Hartley Act

Closed Specification

A specification that is expressly restrictive in stating that only one or two products will satisfy quality requirements (or when performance is so narrowly prescribed that only one or two products satisfy requirements).

Illegal (in principle) for public works projects as the express inclusion of one item implies exclusion of all others, thereby eliminating competition.

Collective Bargaining

Process by which employers and employees hammer out a labor agreement. (ex. Employers negotiate with union about wages, hours, work practices, safety, etc.)

Completion Date

The time of construction (not a duration, but rather, a specific date by which construction must be complete).

Compliance Officer

Title of an OSHA employee responsible for enforcing OSHA regulations through site inspections.

Complimentary Bid

A bid that is not prepared in earnest but is presented to appear to be a serious bid. - Usually generated through collaboration with another bidder who does submit a serious bid.


The exercise of the eminent domain to seize private property.


An essential ingredient to a contract that implies something of value, commonly a states sum of money.

Constructive Acceleration

An increase in the pace of construction that is not a result of a directive but is done by inference. (ex. denial of a legitimate request for a time extension such as for an excusable delay or change order.)


The party (aka prime or general contractor) who has primary responsibility for construction of a project.

Contract Duration

A labor agreement negotiated for a specified period.

Contractor-caused delays

Construction delays caused by or under the control of the contractor - no contract adjustment are associated with such delays.

Contributor negligence

Careless acts of an injured person that accompany the careless acts or physical conditions under the control of a second party.

Cost-of-Living Provisions

Provision used when wages do not keep pace with other costs during periods of high inflation.

Cost-plus Contract

A contract in which the contractor is reimbursed for specified incurred costs, with an additional allowance provided for overhead and profit.


The rejection of an offer followed by another proposal. This proposal forms a new offer. The roles of the negotiating parties are changed with the new offer.

Craft Union

A labor union in which all the member perform the same type of work.

Davis Bacon Act of 1931

A law that states that the prevailing wages for an area shall be paid on all federally funded and federally assisted projects above $2,000.


Permission granted to the public to use a parcel of land for a specified use.

Design-Build Method

aka Turnkey construction

The owner has a single contract for both the design and the construction of a project.


The party responsible for translating the concept of a project into a document that can be used as a guide for its construction.

Design Specifications

"How to" specifications that state exactly what the contractor is to do in order to satisfy a quality requirement. Includes dimensions, installation instructions, etc.

Differing Site Conditions

Physical conditions on a site that differ from the bidding documents or from what would reasonably be expected.

Disputes Review Board

Panel of experts selected on a project to render decision on disputes brought to it for consideration.


Monetary return made by insurance companies to clients who have kept losses to an acceptably low level. (Also, profits of corporations shared with its stockholders.)

Double-breasted Operation

Where a union shop company and an open shop company are owned by the same parent firm. Common ownership can be legitimate, however, care must be exercised to ensure that one firm is not established as an interim means of absorbing the other.


A restricted use of private land granted to another party. (ex. right to cross a parcel to access another; right to install, maintain, monitor utility lines, etc.)

Eichleay Formula

A means by which delay reimbursement can be made to the contractor to compensate for home office overhead. (controversial approach, not widely accepted)

Eminent Domain

The right of the federal, state government or other public agency to take possession of private property for public purposes. Owner should be compensated for property.


The legitimate, though implied, formation of a contact as evident through the actions of the parties involved. When one party places reliance on the other (based on that party's actions) the secondary party cannot subsequently deny that an agreement exists.


Specific items stated in an insurance policy for which no coverage is provided.

Exculpatory Provisions

Contract clauses that shift liability from one of the contracting parties to the other. In the absence of such a clause, the shift in risk will not occur.

Excusable delays

Delays for which time extensions are granted. Such delays typically include "acts of God" and owner-caused delays.

Executed contract

An agreement in which both parties have fully performed in accordance with the contract terms.

Executory Contract

An contract made by two parties in which the terms are set to be fulfilled at a later date.

Experience Modification Rating

A factor, unique to the company, that reflects the past claims history of that company. Used to increase or decrease the basic insurance premium charges.

Expiration Date

Date on which a labor agreement ends.

Express Contract

An agreement in which the terms of the agreement (verbal or written) are clear, concise, explicit and definite.

Express Warranty

Statement in a contract that defines the contractors promise or guarantee that an owner relies on.


Contract provision which requires one party to reimburse the second party for losses/damages described in the provision. (compensation for damages OR exemption from liability)

Ex: Medical Malpractice insurance. Errors & Omissions Insurance

Similar to Hold Harmless Clause

Bid Form

Form given to a bidder to fill out, sign and submit.

Generally contains:

1. Bid Price (including any alternates proposed)

2. Completion time

3. Verification of bidders site visit

4. Acknowledgement of Addenda received

Liquidated Damages

The amount paid to the owner (by contractor) if the project is not completed on time (usually specified as a fixed sum per day).

Must represent a reasonable measure of "actual damages" suffered by the owner.

ex. contractor fails to finish a restaurant project on time which results in a loss of potential revenue for the owner. The contractor pays that loss of potential revenue.

Post-Construction Evaluation

Used as a learning tool for future projects

Performed after users have had a chance to experience the project.

ex. determine if the outdoor-use are is meeting the owner's needs.

Special Conditions

See General Conditions or Boiler Plate

Conditions apart from the general conditions that are specific to a particular project. (They modify the General Conditions)

Advantages of direct selection & negotiation with a single contractor

1. allows contract negotiations to take place before CD's are finished

2. allows project to be built with less detailed CD's (because there won't be any bids)

(May not provide cheapest bid, and still requires construction by architect)

Instruction to Bidders

Instructions for preparing and submitting bids for a construction project. (Included in the bidding documents).

Construction Change Directive

Used in the absence of a total agreement on the terms of a change order. Owner & architect agree in writing, contractor may or may not agree. Written prior to agreement / adjustment to contract sum & time.

Becomes a change order once signed by the contractor (if there is a change in contract sum/time)

Cost Plus Fee Agreement

An agreement where the contractor or architect is reimbursed for costs (direct and indirect) and paid a fee for services. (Guaranteed max price usually set).

(useful when CD's aren't complete at the time of construction contract negotiation).

Substantial Completion

The date, certified by the architect, when the construction is sufficiently completed (according to CD's) so that the owner can occupy the project. The following happens at_____:

1. Owner may occupy the premises.

2. Warranty for project begins.

3. Time for final completion is established.

4. Last progress payment is requested.

Pre-qualification of a contractor for bidding

Typically requires "evidence of insurability"

Punch List

aka Deficiency list.

List prepared by the architect of the work to be completed or corrected by the contractor.

Contractor is responsible to produce??? (answer on 2006 CLARB exam)

Project Closeout Evaluation

Evaluate construction for conformance including:

1. Observation & punch lists

2. Conditional acceptance

3. Maintenance period

4. Certificate of Compliance

Police Power

The right of the community to regulate the activities of private parties to protect public interests (Ex. building codes, animal codes)

Descriptive Specification

Defines exact properties of materials and methods of installation w/o using proprietary (brand) names.

Performance Specification

Defines required results, criteria by which it will be judged & method by which it can be verified. Contractor is free to choose materials & method.

Great for projects where site is being rehabilitates & existing conditions need to be matched.

Proprietary Specification

Calls out actual brand names, model #'s, etc.

Open = allows substitutions

Closed = no substitutions

Cluster Zoning

Density Zoning

Does away with individual lot dimensions. Controls # of units per acre. Provides developer with flexible approach to site design.

Keeps average density throughout, space saved is used for community purposes. Reduces development costs.


When withdrawal demand on an aquifer exceeds the recharge capacity. Causes the surface ground above to compress and sink.

Construction Change Directive

Owner & architect agree to changes in work. (Contractor had not agreed yet). Written prior to agreement/adjustment to contact sum/time. Once signed, it becomes a change order.

Minor changes in the Work

Do not involve changes in contact sum/time & are consistent with CD's intent. Signed by architect & become binding on contractor & owner.

Fast Tracking

If owner wants the change made quickly (without delaying completion), issue a change directive & work out details of the time & sum later.

Final Payment (due after contractor submits):

1. Affidavit that payroll, bills for materials & equipment & other bills have been paid.

2. Certificate evidencing insurance after final payment will remain in force & is currently in effect.

3. Written statement that contractor knows no reason why insurance wouldn't be renewable.

4. Consent of surety, if any, to final payment.

5. Data establishing payment of obligation (receipts, lien releases).

Unit Price

Quantities are unknown (unfair for bidders to take on risk).

Owners pay for work done (determined by actual measured quantities).

Can be used in competitive bid or negotiated contracted (direct selection)

Reason for a Contractor to rescind a bid:

1. mistake or great financial error

2. neither party has been injured

3. Error relating to a material feature of project has occurred

Reasons to terminate contractor:

1. Contractor has gone bankrupt.

2. Contractor fails to pay subcontractors.

3. Contractor persistently disregards local ordinances.

General Specifications

indicates where to deliver & store materials on site