A Basic Guide to Construction Procurement Terms for AEC Marketing Professionals
You’ve received an RFP, and some of the terms and phrases included aren’t familiar to you. Before the kickoff meeting, you want to familiarize yourself with these delivery methodology terms so that you can keep up with or lead the conversation.
Here are common construction procurement terms you need to know:
Best value method: A construction procurement method where contractors are awarded the bid based on prices and quality measurements from previous work performance.
Bid package: Construction documents where the pertinent information is placed into a suitable bidding package by the contractor.
Design-build: a method of project delivery in which one team works under a single contract with the project owner to provide both design and construction services.
GMP: Guaranteed Maximum Price; a common cost-type contract where the contractor is paid for both project costs and the fixed fee that covers risk. The contractor is responsible for any cost overruns unless a formal change order has increased the GMP.
General Conditions: costs incurred during a project that fall within site management, material handling, and project management—i.e. necessary items, resources, and practices that are essential but are not a portion of the finished project.
Joint Venture: a commercial alliance between two or more separate parties where they share both the risk and reward of a single project. Being temporary, joint ventures are distinct from partnerships, which are long-term.
Lean construction: A respect- and relationship-oriented production management-based approach to project delivery; includes concurrent design and engineering, explicit objectives set for the delivery process, and employment of project control which is implemented from design to delivery.
Lease/leaseback: An owner leases property to a developer, who in turn builds a facility on the property and leases it back to the owner.
P3: Public-Private Partnership; a cooperative arrangement between the government and a business to work together to complete a project and/or provide services to the population.
Virtual Design & Construction (VDC): All the multi-disciplinary project models, including the analysis model, visualizations, costs, and engineering modeling.