Z94.4 - Cost Engineering & Project Management

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BACKCHARGE. A cost caused by defective or deficient work by the contractor deducted from or used to offset the amount due to the contractor.

BACKUP. Supporting documents for an estimate or schedule including detailed calculations, descriptions of data sources, and comments on the quality of the data.

BACKWARD PASS. Calculation of the latest finish time and latest start time for all uncompleted network activities or late time for events in the ADM and PDM methods. It is determined by working from the final activity and subtracting durations from uncompleted activities.


BASE PERIOD (OF A GIVEN PRICE INDEX). Period for which prices serve as a reference for current period prices; in other words, the period for which an index is defined as 100 (if expressed in percentage form) or as 1 (if expressed in ratio form).

BASE POINT FOR ESCALATION. Cost index value for a specific month or an average of several months that is used as a basis for calculating escalation.

BASE TIME. The date to which all future and past benefits and costs are converted when a present value method is used (usually the beginning of the study period). Syn.: Base Date.

BATTERY LIMIT. Comprises one or more geographic boundaries, imaginary or real, enclosing a plant or unit being engineered and/or erected, established for the purpose of providing a means of specifically identifying certain portions of the plant, related groups of equipment, or associated facilities. It generally refers to the processing area and includes all the process equipment, and excludes such other facilities as storage, utilities, administration buildings, or auxiliary facilities. The scope included within a battery limit must be well-defined 80 that all personnel will clearly understand it. (See OFF-SITES)

BEGINNING EVENT. An event that signifies the beginning of an activity. Syn. Predecessor Event; Preceding Event; Starting Event.

BEGINNING NETWORK EVENT. The event that signifies the beginning of a network (or subnet).

BEGINNING (START) NODE OF NETWORK. A node at which no activities end, but one or more activities begin.

BENCHMARK INDEXES. For most manufacturing and all mining industries, indexes reflecting changes in output between census years.

BENEFICIAL OCCUPANCY. Use of a building, structure, or facility by the owner for its intended purpose (functionally complete), although other contract work, nonessential to the function of the occupied section, remains to be completed. (See SUBSTANTIAL COMPLETION.)

BID. To submit a price for services; a proposition either verbal or written, for doing work and for supplying materials and/or equipment.

BID BOND. A bond that guarantees the bidder will enter into a contract on the basis of his/her bond.

BIDDER. The individual, partnership, or corporation, or combination thereof, acting directly or through an authorized representative, formally submitting a bid directly to the owner, as distinct from a sub- bidder, who submits a bid to a bidder.

BID SECURITY. Security is provided in connection with the submittal of a bid to guarantee that the bidder, if awarded or offered the contract, will execute the contract and perform the work. The requirements for the bid security are usually designated in a specific section of the bidding documents. The bid security is payable to the owner (usually around 5% of the total bid price) in the form of either a certified or bank check or a bid bond issued by a surety satisfactory to the owner. The bid security of the successful bidder is usually retained until the bidder has executed the agreement and furnished the required contract security, whereupon the bid security is returned. Bid security of the other bidders is returned after the bid opening.

BID SHOPPING. An effort by a prime contractor to reduce the prices quoted by subcontractors and/or suppliers, by providing the bid price to other subcontractors or suppliers in an attempt to get the other subcontractors or suppliers to underbid the original price quoted. The reverse of this situation is when subcontractors try to get a better price out of a prime contractor. This is known as Bid Peddling.

BIDDING DOCUMENTS. The advertisement for bids, instructions to bidders, information available to bidder, bid form with all attachments, and proposed contract documents (including all addenda issued prior to receipt of bids).

BIDDING REQUIREMENTS. The advertisement for bids, instructions to bidders, supplementary instructions and all attachments therein, information to bidders and all attach-ments therein, and bid form and all attachments therein.

BLACK BOX. Describes a system (organism or mechanism) whose structure is unknown either because it cannot be observed or it is proprietary, classified or too complex to be understood.

BLANKET BOND. A bond covering a group of persons, articles, or properties.

BLS. Bureau of Labor Statistics.

BLS PERIODICALS. CPI Detailed Report, issued monthly; Current Wage Developments, issued monthly; Employment and Earnings, issued monthly; Monthly Labor Review, issued monthly; Occupational Outlook Quarterly, issued quarterly; Producers Prices and Price Indexes, issued monthly (previously Wholesale Price Index)

BONDS. Instruments of security furnished by the contractor and/or surety in accordance with the contract documents. The terms contract security refers to the payment bond, performance bond and those other instruments of security required in the contract documents.

BOND, BID. A bond that is executed in connection with the submittal of a bid and which guarantees that the bidder, if awarded or offered the contract, will execute the contract and perform the work. The bidding documents sometimes include a specific form for submittal of the bid bond and may be used to satisfy the requirement for bid security as defined in the bidding documents.

BOND, PAYMENT. A bond that is executed in connection with a contract and which secures the payment of all persons applying labor and material in the prosecution of the work provided for in the contract.

BOND PERFORMANCE. A bond that is executed in connection with a contract and which secures the performance and fulfillment of all undertakings, covenants, terms, conditions, and agreements contained in the contract.

BONUS-PENALTY. A contractual arrangement between a client and a contractor wherein the contractor is provided a bonus, usually a fixed sum of money, for each day the project is completed ahead of a specified schedule and/or below a specified cost, and agrees to pay a similar penalty for each day of completion after the schedule date or over a specified cost up to a specified maximum either way. The penalty situation is sometimes referred to as liquidated damages.

BOOK VALUE (NET). (l) Current investment value on the books calculated as original value less depreciated accruals; (2) New asset value for accounting use; (3) The value of an outstanding share of stock of a corporation at any one time, determined by the number of shares of that class outstanding.

BREACH OF CONTRACT. Failure, by either the owner or the contractor, without legal excuse, to perform any work or duty owed to the other person .

BREAK-EVEN CHART. A graphic representation of the relation between total income and total costs for various levels of production and sales indicating areas of profit and loss.

BREAK-EVEN POINT. (1) In business operations, the rate of operations output, or sales at which income is sufficient to equal operating costs or operating cost plus additional obligations that may be specified: (2) The operating condition, such as output, at which two alternatives are equal in economy; (3) The percentage of capacity operation of a manufacturing plant at which income will just cover expenses.

BREAKOUT SCHEDULE. This jobsite schedule, generally in bar chart form is used to communicate the day-to-day activities to all working levels on the project as directed by the construction manager.  Detail information with regard to equipment use, bulk material requirements, and craft skills distribution, as well as the work to be accomplished, forms the content of this schedule. The  schedule is issued on a weekly basis with a two to three-week look ahead from the issue date. This schedule generally contains from 25 to 100 activities.

BUDGET. A planned allocation of resources.  The planned cost of needed materials is usually subdivided into quantity required and unit cost. The planned cost of labor is usually subdivided into the workhours required and the wage rate (plus fringe benefits and taxes).

BUDGET COST OF WORK PERFORMED (BCWP). The sum of the budgets for completed portion of in-process work, plus the appropriate portion of the budget for level of effort and apportioned effort for the relevant time period BCWP is commonly referred to as “earned value”.

BUDGET COST OF WORK SCHEDULED (BCWS). The sum of the budgets for work scheduled to be accomplished (including work-in- process), plus the appropriate portion of the budgets for level of effort and apportioned effort for the relevant time period.

BULK MATERIAL. Material bought in lots. These items can be purchased from a standard catalog description and are bought in quantity for distribution as required. Examples are pipe (nonspooled), conduit, fittings, and wire.

BURDEN. In construction, the cost of maintaining an office with staff other than operating personnel. Include also federal, state and local taxes, fringe benefits and other union contract obligations. In manufacturing, burden sometimes denotes overhead.

BURDEN OF PROOF. The necessity of proving the facts in a dispute on an issue raised between the owner and the contractor. In a claim situation, the burden of proof is always on the person filing the claim. This is true whether the contractor is claiming against the owner, or the owner is making a claim against the contractor.

BUSINESS PLANNING. The determination of financial, production and sales goals of a business organization; and the identification of resources, methods, and procedures required to achieve the established objectives within specified budgets and timetables.

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