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Glossary

This glossary provides terms from the world of project management, without intending to be exhaustive.
In the end of the day, we want to understand each other well.



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Additional claims

Additional claims are made by the client after contract conclusion, exceeding the contracted remuneration. Additional claims for changed or perturbed realisation justified with regard to cause and amount leads to supplementary claim agreements. Pursuant to § 16 no. 3 (2), a contractor’s unreserved acceptance of a client’s final payment excludes additional claims, if the contractor has been informed about the final payment, in written format and with reference to the exclusion rule.1)

Advance payment

Pursuant to § 16 no. 2 (1), advance payment can be agreed before or after contract conclusion, on the client´s request, for increased security. Interest shall be paid on advance payment amounts at the lombard rate for the relevant year plus 1 %, if not stipulated otherwise. Pursuant to (2), advance payments shall be offset with the next due payment, provided they are both meant for the same achievement level.1)

Ancillary contractor

For subordinate construction services, a client places orders with ancillary contractors, in addition to the contract for basic construction works concluded with a main contractor. There is no direct contractual relationship between main and ancillary contractors.1)

Application for planning approval

Creating the conditions for construction, pursuant to §§ 30, 33, 34 and 35 BauGB (German Statutory Code on Construction and Building).2)

Balancing item

Collecting pool for all variances between planning, awarding and settlement values, if they vary within a normal tolerance and tend towards equalisation, which should be supported through suitable measures of cost control.1)

Basic services

Pursuant to § 2 (2) HOAI (Fee Structure for Architects and Engineers), services required to fulfill an order, in general. Technically related basic services are collected to form concluded performance stages.1)

Building and room book

A building and room book contains written descriptions of buildings and rooms, as a special project control service. It constitutes a consequent continuation of the building, function, room and equipment programs as well as a general construction description, providing non-technicians with useful comments accompanying sketches. Building and room books provide a precise specification of user/building owner requirements as well as common information, co-ordination and decision bases for users/building owners and planners. Firstly, a building and room book can be prepared as a requirement catalogue, attached to the user demand program. It can be continued when the pre-planning, design and realisation planning has been finished, completed and handed over to the user as building and room book, after completion of the construction works.1)

Building maintenance costs

Entity of measures for maintenance and preservation of the nominal condition of buildings and associated facilities (cost type 6, DIN 18960), but without cleaning and maintenance of traffic areas and green spaces (cost type 5.7) and without maintenance and inspection of inhouse automation and operational equipments (cost type 5.6).1)

Building utilisation costs

According to DIN 18960, all direct costs for buildings with their associated structural facilities and real estates, directly arising on a regular or irregular basis, from the point of time the building was usable until its demolition. The specific operative and productive personnel and non-personnel costs are not regulated in DIN 18960.1)

Capacity

Pursuant to DIN 69902, operational resources, i. e. human and physical resources, needed for the realisation of processes, work packages or projects.1)

Capacity planning

Adjustment of resources(humans/machines) to expected/necessary requirements, to complete a certain amount of work within a given period of time.

Capital management

Encompasses all conductive measures for the regulation of payment transactions.

Change Management

Method to control changes incurred from a certain point of time. The reason for the changes, each stage of the changes, the impact on costs, schedule and quality should be documented.

Co-ordination of planning participants

The project controller requests the current state of planning and determines, together with the client and the planning participants, the priorities to be given to further project development. The open points, resulting from project control meetings and other discussions, such as internal planning meetings and further consultations, are respectively discussed as ‘open points’ or ‘decisions’ and carried along in the protocols until they have been concluded.

Co-ordination of the building owner’s personal contribution

The project controller, regularly obtaining relevant project information from the client, is integrated into the processes of the building owner’s personal contribution. Project control meetings held on a regular basis ensure project transparency, the possibility of process control and competent decisions of the client. Furthermore, they enable continual control of project targets and process compliance.
A report giving an overview of the project status as a whole and important project stages, including reminders for necessary decisions to be made by the client, is provided for the client’s information and ensures current synchronisation with the client.

Commercial real estate evaluation

Within the scope of a real estate transaction, fiscal and economic factors are objectified. Commercial real estate evaluation helps to create transparency and reveals future prospects. Commercial property evaluation is part of ‘due diligence’.

Commissioning

The initial operation /utilisation of a plant for its intended purpose.

Concepts of flexibility

It is not possible to determine the qualitative and quantitative user demand for projects developed for a circle of users without utilisation contracts. This is what a concept of flexibility is for, stipulating the market requirements for construction, equipment and preparation of the premises.

Confirmation of financial coverage

Firstly, we have to differentiate between confirmation of coverage for orders and confirmation of coverage for amendments to the contract. A confirmation of coverage for orders requires a comparison of nominal values for awarding units, on the basis of current cost calculation from tenders. If the nominal values are exceeded, suitable measures to cover this should be established. A confirmation of coverage for amendments to the contract is to be proven through reserves, set aside with the award of a contract, or through savings with other partial services or by budget increase. Pre-condition for each proper main and supplementory order is documented evidence and confirmation of financial coverage in the form of confirmation of coverage.1)

Conflict management

A problem requires a solution which is based on mere facts. In contrast to this, a conflict is caused by contrasting needs, interests, feelings or actions. Therefore, a conflict within a co-operation/teamwork manifests itself in various ways. However, conflicts always lower the motivation of the parties involved thus endangering business and other targets. Within the scope of conflict management, the causes for a conflict are analysed on different levels, facts, relationships or values, and gradually reduced at an early stage. Escalating conflicts are hard to solve and endanger the achievement of targets.

Construction costs

Not clearly defined term for the costs incurred by a client for construction works.1)

Construction permit procedure

Procedure, regulated by the respective regional building law, for the preparation of construction and building application documents, submission and treatment of the building application until the grant of construction permit, the necessary notifications during the construction works and construction site inspection until the final acceptance.1)

Construction program

Provides an assembly of the required operational surface space, rooms and the operational areas to be accomodated.1)

Contract management

Participation in the development of contract models, including technical consultation and final negotiations.

Controlling

For a company to ensure its long term livelihood it is important to systematically collect, analyse and summarise a lot of information and to place it at the managers´disposal, in a suitable format. Controlling should provide an information and communication system for the control of processes, in terms of type, content, extent, periodicity, interdependency and mechanisms of action with nominal/actual value variances.1)

Coordination of client responsibilities

Cost-benefit analysis

A formal discipline used to help assess the profitability of investments of macroeconomic importance, weighing the benefit and the investment costs, in order to maximise the overall economic benefit. This method is reasonable if all operative and social benefit and cost factors can be evaluated in monetary units, thus providing a one-dimensional target system, as the cost-efficiency analysis does.1)

Cost-benefit analysis

According to definition, a cost-benefit analysis is always reasonable, if both microeconomic and macroeconomic targets, with their relevant benefit and cost factors, are to be considered or if also partitial targets that cannot be monetarily evaluated are to be considered, within the scope of a microeconomic analysis. Generally, there are three prevailing approaches, i. e. cost-benefit analysis, utility analysis, and cost-effectiveness.1)

Cost appraisal

Cost appraisals serve to determine and prove the costs incurred and can be used for comparisons and documentation. Cost appraisals should itemise the total costs as cost types, broken down to the second level of the cost structure. With construction projects, analysed and documented for comparisons and cost characteristics, the total costs should be subdivided to a depth of as many as three levels of the cost structure.1)

Cost calculation

Approach for a rough determination of costs, serving as a basis for the selection of a conceptual design. In the cost calculaton the total costs should be determined by cost type to a depth of as many as two levels of the cost structure.1)

Cost characteristic

Pursuant to DIN 276 (June 1993), a cost characteristic is a value expressing the ratio between a cost and its related unit (e. g. surface area or volume, according to DIN 277 part 1 and part 2).1)

Cost comparison

A cost comparison is based on the results of a costing approach, using various reference parametres for cost characteristics. For example, €/m² gross surface area, €/ m² usable surface area, €/m³ gross volume, offsets current against previous costings or determines the difference between nominal and actual costs. For example, between a budget for the award of a contract and the results submitted, or between the order amount and the final settlement. Cost exceedance should be compensated through suitable corrective measures.1)

Cost control

Specific interference with cost development, in particular, within the stages of project creation and planning, if variances were identified by means of cost contol.

Cost controlling

Cost variances are identified through comparison of current and previous costings. Cost controlling serves to maintain the fixed cost targets.1)

Cost estimate

A cost estimate is a rough determination of costs, serving as a basis for the decision on pre-planning. Within the scope of a cost estimate, the total costs should be determined by cost types, according to DIN 276 (June 1993), at least to the first level of the cost structure.1)

Cost frame

A cost frame is the first cost statement on the basis of a user demand program, neither included in DIN 276 nor in the performance stages, according to HOAI (Fee Structure for Architects and Engineers). The ’dilemma of the first stated figure’ often comes about because the cost frame significantly varies from the actual costing. However, cost exceedance can often be avoided or considerably reduced if the cost frame is pre-determined as a binding budget limitation (cost cap).

Cost management

Cost optimisation

Optimisation of construction costs means achievement of the best possible ratio of construction costs and quality/quantity, usually, more quality/quantity at low costs, through technical and economic planning solutions. Optimisation of total costs means achievement of the best possible ratio of life cycle costs (construction, building utilisation and building maintenance costs) and quality/quantity (more quality/quantity at low life cycle costs).1)

Cost planning

Pursuant to DIN 276 (June 1993), cost planning is the entity of all measures of costing, monitoring and controlling of costs. Cost planning continually supports all planning and realisation stages of a construction project, systematically analysing the causes and impacts of costs.1)

Cost quotation

It is a prediction of the costs with as much accuracy as possible, serving as a basis for decision on realisation planning and preparation of awarding procedures. Within the scope of a cost quotation, the total costs should be determined by cost type to a depth of as many as three levels of the cost structure.1)

Cost structure

Pursuant to DIN 276 (June 1993), the cost structure is the ordinal structure, after which the total costs of a construction project are itemised as cost types.1)

Cost type

Pursuant to DIN 276 (June 1993), a cost type is a summary of individual costs, grouped together by planning or project development criteria and subdivided to a depth of as many as three levels.1)

Cost variance

Result of cost control or cost comparison. Possible reasons for cost variance are mainly;
- intended project changes, with regard to standard or quantity;
- correction of estimates, due to inaccurate determination of quantity or variance from cost characteristics of earlier project stages; or
- index changes resulting from the development of construction prices.1)

Costing

It is a prediction of future costs or determination of actual costs incurred, respectively. Costing constitutes a basis for cost controlling, planning, awarding of contracts, performance decisions and serves to provide evidence of the costs incurred.1)

Costs

Costs are defined as the rated operational necessary consumption of goods and services
that have been used up for a company’s business and for the provision of the capacities required for the production and sales of a company’s products. The consumption of input values is normally balanced by a value added in the form of a company’s achievement. In the building industry, costs are, pursuant to DIN 276 (June 1993), the input of goods, services and duties, which are necessary to plan and realise construction measures. DIN 276 specifies a 3-level cost stucture, using 3-digit ordinal numbers. On the first level, the total costs are structured into the following seven cost types: 100 - piece of land, 200 - preparation and development, 300 - building constructions, 400 –technical building equipment, 500 - outside facilities, 600 - finishes and works of art, 700 ancillary construction costs.1)

Craft

Single industrial services are called crafts, according to VOB (German Construction Contract Procedures) (comp. § 4 no. 3 VOB/A) or ‘performance areas’, pursuant to the performance standards of ‘GAEB - Gemeinsamer Ausschuss Elektronik im Bauwesen’ (Committee for Electronics in the Building Industry).1)

Critical path

Sequence of (project) activities with total float time equal to zero. Any delay on the critical path will cause the entire project to be delayed.1)

Defect controlling

Control and monitoring for the elimination of defects after the completion of a building, within the scope of final acceptance.

Detailed process planning

Precise short-term and medium-term planning of project processes at different project levels, and basis for a detailed capacity planning and the supervision and control of processes. The result is a process structure in the form of a precise network plan or a networked bar plan, giving a detailed insight into project processes.1)

Documents for the award of contracts

Pursuant to § 10 no. 1 § 1 VOB/A (German construction contract procedures, part A), they are:
- the cover letter;
- conditions for application, if available;
- tender documents
- service description by general construction description with bill of quantities or with performance programme;
- tender plans;
- samples and patterns, if available;
- special contract conditions;
- supplementory contract conditions;
- supplementory technical contract conditions, if necessary;
- general technical contract conditions (VOB/C) and;
- general contract conditions (VOB/B).1)

Due diligence

Tool for the provision of information about real estate transactions to make purchase prices comparable. Due diligence encompasses legal due diligence, economic due diligence, technical due diligence, ecological due diligence and financial due diligence. See also commercial and technical evaluation of real estate.

Dunning and arrears process

The task of the dunning process is the monitoring of a company’s claims for outstanding debts. Most companies grant their customers a time limit of between 8 and 30 days, to settle receivables from goods and services. If an invoice has not been paid after 30 days, the client must be notified about the delay of payment. The operational dunning part of financial accounting serves to maintain a company’s solvency. A functional dunning is an important instrument for the control of liquidity.

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sources:
1) AHO(2004a) Hrsg. - Untersuchungen zum Leistungsbild, zur Honorierung und zur Beauftragung von Projektmanagementleistungen in der Bau- und Immobilienwirtschaft, Heft 9 des AHO e.V., Bundesanzeiger Verlagsgesellschaft, Köln

2) AHO(2004b) Hrsg. - Neue Leistungsbilder zum Projektmanagement in der Bau- und Immobilienwirtschaft, Heft Nr. 19 des AHO e.V., Bundesanzeiger Verlagsgesellschaft, Köln

3) FM NRW (2003) Hrsg. - Public Private Partnership im Hochbau - Leitfaden "Wirtschaftlichkeitsvergleich". Finanzministerium des Landes NRW, Düsseldorf


Customer Area

Project information system