The vocabulary of commercial subcontracting, in plain English — with the part that actually costs money explained, not just the definition.
Also: addenda · bid addendum
An addendum is a formal change to the bid documents issued by the architect or general contractor before bids are due. It can revise drawings, specifications, quantities, the scope, or the bid date, and it becomes part of the contract documents.
Also: bid security
A bid bond is a surety guarantee, usually five to ten percent of the bid amount, that a contractor who is awarded a project will enter into the contract and provide the required performance and payment bonds. If they refuse, the bond compensates the owner for the cost of going to the next bidder.
Also: bid tabulation · bid tab sheet
A bid tab is the spreadsheet a general contractor's estimator uses to compare every subcontractor bid received for one trade package, line by line, so the numbers can be levelled against each other and the lowest responsible bid identified.
Also: CO · change directive
A change order is a written amendment to an existing contract that adds, removes, or modifies work, and adjusts the contract price and schedule accordingly. It applies after a contract is in place — unlike an addendum, which changes the documents before bids are due.
Also: ITB · Invitation for Bid · bid invitation
An invitation to bid (ITB) is a general contractor asking a subcontractor to price a defined scope of work on a specific project. It names the project and location, states a bid due date, and provides access to drawings, specifications, and any addenda issued.
Also: waiver of lien · lien release
A lien waiver is a document in which a contractor, subcontractor, or supplier gives up their right to file a mechanics lien against a property, in exchange for payment. General contractors typically require one with every pay application.
Also: pay app · application for payment · AIA G702
A pay application is the monthly invoice a subcontractor submits for work completed during a billing period. It states the percentage complete of each schedule-of-values line item, subtracts retainage and previous payments, and arrives at the amount currently due.
Also: prequal · subcontractor prequalification
Prequalification is a general contractor's vetting process that a subcontractor must pass before receiving invitations to bid. It typically reviews insurance coverage, financial capacity, bonding, safety record, licensing, and references from comparable completed projects.
Also: retention · holdback
Retainage is a percentage of each progress payment withheld by the owner or general contractor until the work is complete and accepted. Five to ten percent is commonly seen, and it is released after substantial completion and closeout.
Also: SOV
A schedule of values is a breakdown of a subcontractor's total contract price into individual line items, each with its own dollar value. It is submitted after award and becomes the basis for monthly progress billing — you invoice the percentage complete of each line.
Also: scope · inclusions and exclusions
A scope of work defines exactly what a subcontractor is and is not responsible for on a project. In a bid proposal it is usually expressed as inclusions, exclusions, and qualifications — and it determines whether extra work becomes a change order or an unpaid dispute.
Substantial completion is the point at which a project is sufficiently finished that the owner can occupy and use it for its intended purpose, even if minor items remain. It typically starts warranty periods, ends liability for liquidated damages, and triggers the process that releases retainage.
Invitations, proposals, follow-up, change orders, schedule of values, and pay applications — from the first invitation to the final invoice.
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