HELM Training Glossary

Agreement
When there is a defined arrangement between people or groups of people. Can be verbal or written.

Allowance
A placeholder number for a scope of work which is undefined or waiting further specification.

Billing Rate
What you charge your clients for labor. For example, our Project Managers have a billing rate of $95/hour. This is not what our PMs get paid (their wage). Note: Some builders will add markup to the billing rate.

Burdened Labor Rate

The employee’s hourly wage plus the cost of payroll taxes and benefits. Labor burden costs include benefits that a company must, or chooses to, pay for employees included on their payroll. These costs include but are not limited to payroll taxes, health insurance, retirement contributions, and any other benefits that a company provides an employee. Note: Labor Burden does not factor-in taxes paid by employees on their paychecks.

Budget
Total set of costs, estimates, and allowances that will be spent on a project. Sometimes referred to as the Total Project Budget, this includes soft costs, land acquisition, and other costs typically not included in a construction estimate.

CD (Construction Documents)
Drawing and notes sufficient for a final estimate and to build a project.

Change Order
Change to scope of project that affects time and money.

COGS (Cost of Goods Sold)

In construction, these are typically costs directly attributable (billable) to a project.

COGS Hourly Burden

Hourly pay rate plus taxes Social Security, Medicare, State Tax, Federal Unemployment, State Unemployment. Should be adjusted to specifically include the payroll items which appear in the COGS section of a company’s Profit & Loss statement.

Direct Cost + Indirect Costs for labor

Sometimes called Labor Cost Rate

Contract
Written document outlining terms of the construction project. Legally binding.

Cost
Amount of money paid for a service or material. In terms of job cost accounting, costs are the amount paid by the contractor to provide the product (before markup).

Cost Code
Standardized categories used to track and manage project costs. CSI codes are one set of standard codes for the architecture & construction industry.

Cost-Plus
Type of contract where the owner pays the contractor the actual costs of the materials and labor plus an additional negotiated fee or percentage over that amount.

Critical Path
The sequence of stages determining the minimum time needed for an operation. Usually used in reference to a schedule to determine the key tasks to be accomplished to stay on schedule.

CSI (Construction Specifications Institute)
CSI produces a set of standard codes for the construction industry to organize project notes and estimates. Sometimes also referred to as MasterFormat. The full set of codes includes 50 Divisions, at HELM we typically use the 16 Division (older) version which is more appropriate for residential construction.

DD (Design Development or Detailed Design)
Design phase when decisions about shape, size, materials, and products are finalized.

Estimate
Informed or educated guess about the cost of something. Will often come with high-low ranges.

Financial Reports Standard Reports needed by the stakeholders outside of your company, such as investors, creditors and analysts as well as your Management Team, for example Balance Sheet and P&L

Fixed-Price, Fixed-Cost
A type of contract where the owner pays the contractor a negotiated price for the materials, trade partners, and labor based on a detailed scope of work.

Gantt Chart
A project management document that shows tasks in a sequence and along a timeline. Used for project schedules.

Gross Profit

The amount remaining from the project price when the cost of goods sold (billable costs) are subtracted.

PM (Gross Profit Margin)
Gross Profit divided by Sales Price equals GPM

Historical Data

Record of estimated and actual costs on completed projects.

Hourly Rate or Wage Wage you pay your employees per hour.

Kickoff
First meeting for a project where the team meets, goals are set, a process is outlined, and ideas for team unity/culture are planted.

Mark-Up

Markup is the percentage by which the cost of a product is increased in order to derive the sales price.

Job Costs x Markup = Sales Price, or

COGs Hourly Burden Rate x Markup = Billing Rate

Net Profit

The amount remaining from the project price when the COGS and Overhead are subtracted. Sometimes referred to as the “bottom line” or "net income".

Net Profit Margin

Net Profit Margin (sometimes known as simply ‘net’) is the money a company makes after accounting for the job-related costs and overhead expenses, commonly expressed as a percentage of sales.

Sales Price – (Job Costs + Expenses) = Net Profit

Net Profit ÷ Sales Price = Net Profit Margin

Mark-Up
A percentage charged on top of costs to cover Overhead and Profit.

Notes to the Estimate
Notes that define and clarify elements of the estimate. The goal of these notes is to avoid unwritten assumptions which can create confusion and stress. The better the Notes to the Estimate are, the better protected the estimator is legally and professionally.

Operating Budget Billing Rate

This billing rate includes a labor markup. This rate is used on HELM's Operating Budget Template.

Overhead
Any costs to operate the business that are not directly billable to a client (also referred to as Expenses)

Owner’s Draw

The amount of money taken out of the company by the Owner(s), separate from payroll or salary. Typically shown on the Balance Sheet under Equity.

Owner’s Manual
Like a manual for a car, an owner's manual is an operations guide for a building. All building and mechanical systems are described. Includes a trouble-shooting section.

Post-mortem
Activity for team to do at end of project where process, outcome and data are discusses. Lessons learned are applied to next projects.

Preliminary Design

The first phase of the project design where scope, project requirements, and concepts are decided. This phase sometimes includes drawings and a pre-conceived budget, but not always.

Pre-mortem
Activity for team to do at start of project where worst-case scenarios and problems are imagined and solutions/processes to prevent these problems are created.

Price
Amount charged to the client for a service or item (Cost + Markup = Price)

Profit & Loss Statement (P&L)

An income report showing the company’s revenues, COGS, and expenses during a particular period.

Profit Margin
Money a company makes after accounting for the Cost of Goods Sold and Overhead, commonly expressed as a percentage of sales. Net Profit ÷ Sales Price

Project Close Out
Meeting at the end of a project with the client to receive feedback and resolve any remaining outstanding items or questions.

Prosperity (Profit)

The original "bottom line" is profit. By focusing on Prosperity, HELM centers the financial sustainability of companies and their whole team. In our consulting work, this area includes focusing on living wages, compensation and benefits, charitable giving, and financial resilience (capital reserves, etc).

Punchlist
Final to-do list generated in the walk-through near the end of the project. Purpose / Mission The North Star, a never-ending piece of work that we commit to going after for life. Quote

An estimate of cost received from a Trade Partner or Vendor.

RFI (Request for Information)
A request for clarification or detail (typically made to the architect).

RFP (Request for Proposal)

A process whereby the client, builder, or General Contractor requests quotes (“proposals”) from trade partners or contractors. The RFP typically includes the scope of work, schedule, and a deadline for submittal.

Schedule of Values
A list of every work item on a project, along with each item’s price (value).

SD (Schematic Design)
Early design phase where design concepts are translated into architectural drawings.

Takeoffs
A listing of all labor and materials and the amounts/units of each that will be required, which provides a breakdown of all of the components required to complete a construction project.

Team, Team Members
Replaces the male-centric "guys.”

Trade Partners
Replaces "subcontractors". Trades refers to various areas of expertise within building and construction (MEP, excavation, etc.). Partners is a term of respect that avoids the inherent hierarchy of "sub" or "consultant". When project teams are integrated everyone's input is valued and the process is not always linear.

Wages

A payment usually of money for labor or services usually according to contract and on an hourly, daily, or piecework basis. Wages are paid to employees through payroll.

Length

• 1 foot = 12 inches

• 1 yard = 3 feet

Area

• 1 square foot = 144 square inches

• 1 square yard = 9 square feet

• 1 square = 100 square feet

• 1 acre = 43,560 square feet

Volume

• 1 cubic yard = 27 cubic feet

Weight

• 1 ton (imperial) = 2000 pounds

For example, the concrete needed to pour a 4-inch slab, 70 ft. long and 50 ft. wide can be figured as:
Volume = Length x Width x Thickness =
70 ft. x 50 ft. x 4 in./12 = 1167 cubic feet, or
1167/27 = 43.2 cubic yards (without waste)