Construction Project Management Consultants Key Terms

Construction terms every business owner and consultant must know

By Susan Davis

The real estate and construction business can be quite complex. Before entering into any type of construction agreement one must fully understand what is being discussed. The following key terms will help business owners work with construction project management consultants to ensure that the construction process goes smoothly and that all vital areas are addressed. These areas should be included in discussions with consultants and contractors so that all parties are kept well informed.

Project management professional (PMP)

A project management professional is a person who has a PMP certification. A person can only receive a PMP certification after a specific amount of experience and by passing a project manager exam. It's beneficial for your business to hire a PMP because of the required experience and knowledge.
Try: wiseGEEK has a helpful overview of the advantages of using a project management professional and many related articles.

Change order

Business owners and consultants alike must be aware of change orders. A change order is a written document agreed to by the contractor and business owner detailing a change from the original agreement as to the work, the time schedule or the money amount.
Try: For legal information concerning change orders as well as details on the various types of change orders, refer to the NationalLeinLaw website.

Indirect costs/soft costs

Indirect costs, also known as soft costs, are the expenses that consultants or contractors incur that are not for a specific task or project, but which still must be covered. You will want to know what these costs are expected to be prior to entering into any sort of agreement.
Try: A brief summary of indirect or soft costs can be found on the Commercial Cost Control website.

Request for proposal (RFP)

It is imperative that both consultants and business owners understand requests for proposals. This document formally lays out the details of the job and asks for companies to provide a bid to perform the service. Business often hire consultants to handle this process.
Try: It's important to know all the details that should be included in a high quality request for proposal. Collaborint Web Management Services provides very helpful RFP information on their website.

Schedule of values

Consultants and business owners alike need to be aware of the schedule of values and need to track it closely. This schedule is completed by the contractor and details how much money is allocated to each part of the project. It's used as a way to monitor payments to the contractor.
Try: Visit constructionscheduling.com to see examples of schedule of values sheets and the information they contain.

Addendum

An addendum is a written document clarifying, modifying or adding to any type of original agreement. Consultants may need to write an addendum to modify the agreement with a construction contractor, or the business owner may have to create an addendum to change the original agreement with the consultant.
Try: LawDepot has a helpful online tool to create simple and legal addendums. This is a helpful tool for both consultants and business owners.