Glossary
The words in your contract
Short, plain-English definitions of the terms that turn up in building contracts, guarantee wordings and policy schedules. Each one links to a fuller entry.
A
- ALOP
- Advance Loss of Profits
B
- Beneficiary
- A beneficiary is just the person or company that gets paid out if something goes wrong.
- Bill of Quantities
- A Bill of Quantities (BoQ) is a detailed list that breaks down all the materials, labour, and work items needed to complete a project, along with their quantities and costs.
C
- COID
- Compensation for Occupational Injuries and Diseases Act
- Collateral
- Collateral is something valuable you give as security, like a backup promise.
- Contractors All Risk (CAR)
- Contract Works Insurance covers most of the risks you face on a construction site, all in one policy. You can take it out for a specific job, or on an annual basis to cover multiple projects throughout the year.
- Contractors Site Liability
- Contractor’s Site Liability is cover that protects you if something goes wrong on site and causes injury or damage to people or property that are not part of your team or the project.
- CPHA
- CPHA stands for Contractors Plant Hire Association.
D
- Defects liability period
- The period after practical completion during which the contractor must return and fix defects. It is set by the contract and it ends at final completion.
- Design and Construct Indemnity
- D&CI covers financial losses to clients resulting from errors, omissions or negligence in the design and construct phase of a project.
- DSU
- Delay in Start-Up
E
- Employer
- What building contracts call your client: the party that awarded you the work, not your own boss. A construction guarantee protects the employer, not you.
F
- Facility
- A facility is just a setup or agreement that makes it easier to get guarantees or insurance when you need them.
- Final completion
- Certified once the defects liability period has ended and outstanding defects have been put right. This is normally when a retention guarantee expires, on the terms of its wording.
- Free-Issue Materials
- Free-issue materials are materials, components, or equipment supplied by the employer/client at no cost to the contractor, but which the contractor is responsible for once they are delivered to site.
G
- Guarantor
- The insurance company issuing the guarantee.
I
- Intermediary
- An intermediary is the person or company in the middle, the go-between.
J
- JBCC
- JBCC stands for Joint Building Contracts Committee. It’s a group in South Africa that creates standard building contracts used for construction jobs, big or small.
L
- Letter Of Intent
- A Letter of Intent (LOI) is like a promise in writing. It’s a letter from your insurance broker or insurer saying:
O
- On-demand guarantee
- A guarantee where the employer's demand generally triggers payment before the underlying dispute is resolved. Whether yours is on-demand depends on the wording the employer requires.
P
- Payment certificate
- The document certifying how much is due to you for a period of work. Retention is normally deducted from each one before payment.
- Plant All Risk (PAR)
- This covers your dedicated construction equipment, like bulldozers, excavators, scaffolding, batch plants, and other non-road machinery.
- Practical completion
- The point at which the works are complete enough for the employer to use them, even if minor items remain outstanding. It starts the defects liability period.
- Premium
- The price of the guarantee itself. Unlike collateral, the premium is not refundable. It is set on underwriting and shown on your facility quotation before you commit.
- Premium Rate
- A premium rate is the price you pay for cover, usually shown as a percentage.
- Professional Indemnity (PI)
- PI is cover against claims that arise when a professional makes a mistake, either through errors, omissions or miscalculations.
R
- Recourse
- Recourse means your right to take action or seek a remedy when something goes wrong.
- Remedial Work
- Remedial work simply means repair work or corrective work that a contractor carries out to fix defects, faults, or damage in the works after practical completion.
- Repudiation
- In simple terms, means refusing to accept or honor something.
- Retention
- Money the employer holds back from each payment as security that the works will be finished properly and defects put right. Normally a percentage of every payment certificate, released in stages.
- Retroactive Date
- A retroactive date is the earliest point in time your insurance will cover work you’ve done.
S
- SASRIA
- South African Special Risks Insurance Association
- Security Documents
- Security documents are the papers that prove something is being held as backup, just in case you don’t deliver on a contract or repay a loan.
T
- The Principal
- This entity is responsible for performing the contract. The guarantee is issued in their name.
W
- WCA
- Workmen’s Compensation Act
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