Plain-English reference
Markup vs margin. Retainage. AIA G702. Lien waivers. Burdened labor rate. Every term you’ll hear from a bookkeeper, GC, or commercial customer — defined in plain English, with links to the relevant calculator where one exists.
Standard American Institute of Architects forms used to submit progress-billing payment applications on commercial construction jobs. G702 is the cover sheet (amount due this period); G703 is the per-line-item continuation showing scheduled value, work completed, retainage withheld. Required by most general contractors on commercial subs.
A budgeted dollar amount included in a proposal for an item the customer hasn't selected yet (e.g., '$3,500 cabinet allowance'). The proposal commits to the budget; if the customer's actual selection costs more, the overage is billed as a change order. Common in remodels.
A type of surety bond submitted with a bid on a public-works contract, guaranteeing the contractor will sign the contract and provide a performance bond if awarded. Common on government and large commercial jobs; typically 5–10% of the bid.
Your true cost per hour of an employee, including base wage + payroll taxes (FICA, FUTA, SUTA) + workers' comp + benefits + vacation/sick + non-billable hours. Typically 1.4–1.8× the base wage. Bidding off base wage instead of burdened rate is the #1 way contractors lose money on labor.
Open the calculator →A formal modification to the original contract after work has started — adds, deletes, or alters scope and adjusts the price + schedule. Always in writing. Should include the additional cost, justification, and customer signature before the work happens.
Open the calculator →A contract structure where the customer pays actual costs (labor + materials) plus an agreed markup. Lower risk for the contractor, higher cost-uncertainty for the customer. Most residential customers prefer flat-fee; cost-plus is common on emergency repairs and renovations of unknown scope.
The total fully-loaded cost to put a crew on a jobsite for one working day — burdened wages × hours × crew members + truck/equipment costs + materials handling. The unit of measure many estimators use to think about labor commitment.
Open the calculator →The decision of whether to rent specialized equipment (lift, compressor, generator) for a single job versus purchasing it. Rule of thumb: if you'd use the equipment 60+ days per year for 3+ years, buying usually wins. Below that, rent.
Open the calculator →A document where a contractor or supplier waives their right to file a mechanic's lien on the property in exchange for receiving payment. Conditional waivers are common; unconditional waivers should only be signed after payment clears. Required by many GCs on commercial work.
Profit divided by SELLING price, expressed as a percentage. A 30% margin on a $1,000 job means $300 profit. Different from markup — and confusing the two is the #2 way contractors lose money.
Open the calculator →The percentage ADDED to cost to arrive at selling price. A 40% markup on a $700 cost gives a $980 selling price ($700 × 1.40). Different from margin — a 40% markup is a 28.6% margin, not a 40% margin.
Open the calculator →The percentage of additional material ordered beyond the calculated quantity to account for cuts, breakage, mistakes, and pattern alignment. Typically 8% for straight-lay flooring, 10–15% for roofing, 15–25% for tile, more for diagonal/herringbone patterns.
Open the calculator →Payment terms — the customer has 30 days from invoice date to pay. Net 60 is 60 days, Net 15 is 15 days. Standard in commercial; rare in residential where deposit + final-on-completion is more common.
Fixed costs of running the business not tied to any specific job — office rent, software subscriptions, marketing, owner-operator's draw, accounting, insurance. Must be allocated across jobs (typically as a percentage uplift) or you'll bid every job at a loss without realizing it.
A surety bond that guarantees the contractor will complete the job according to the contract. If the contractor defaults, the bond pays the customer's cost to hire a replacement. Common on commercial and public-works contracts above certain dollar thresholds.
The final list of items requiring completion or correction before the project is considered done. Generated at substantial completion; cleared before final payment is released. Common in residential remodels and commercial work.
A percentage of each progress payment withheld by the customer (typically 5–10%) until the project is complete. Designed to incentivize the contractor to finish punch list and warranty work. Released at substantial completion. Hurts contractor cashflow; many states regulate it.
Open the calculator →When a job's scope expands beyond the original proposal without corresponding change orders + price increases. The single biggest hidden margin-killer on residential remodels. Defense: written change orders for every addition, before the work happens.
Documentation submitted to the architect/engineer for approval before a material or product is installed — typically product data, shop drawings, samples. Common on commercial work; less so in residential except for custom millwork or fixtures.
The point at which the work is sufficiently complete for the customer to use the space for its intended purpose. Triggers retainage release on commercial jobs and warranty start dates. Usually marked by punch-list issuance.
A time-and-materials contract with a ceiling — 'we'll bill T&M up to $X, then convert to flat-fee or stop work.' Hybrid that protects both sides on jobs of uncertain scope.
A specialty within construction: HVAC, electrical, plumbing, roofing, painting, flooring, concrete, etc. Most residential contractors specialize in one trade plus light general work. ProJobCalc has 40+ trade-specific calculators.
Hours spent driving to and from a job, between jobs, or fetching materials. Often unbilled by mistake. Burdened-rate × travel-hours should either be billed (commercial) or baked into the bid as overhead (residential). Either way, account for it.
See 'Material waste factor.'
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