Glossary of construction tender and contract terms

Updated 05 November 2026

Tender documents are full of abbreviations. This glossary explains the ones you will meet most often in construction, infrastructure and energy projects.

Addendum: A formal change to the tender documents issued before the deadline – for example a new drawing, an answer to a question or a deadline extension. Bidders must acknowledge every addendum.
Award / Letter of Award (LOA): The client's notice that a bidder has been selected. It is usually followed by contract signature. A Letter of Intent (LOI) signals the intention to award, sometimes with limited instructions to start.
Bid bond / bid security: A bank guarantee submitted with a bid that the client can claim if the bidder withdraws or refuses to sign after winning.
Bill of quantities (BOQ): A list of the work items and quantities that bidders price. On lump-sum contracts it may be for information only.
Clarification: A written question from a bidder and the client's reply, usually shared with all bidders.
Design and build (D&B): A contract in which the contractor is responsible for both design and construction.
DBFM / DBFO / PPP: Design-build-finance-maintain (or operate) and public-private partnership: the private side also finances the asset and maintains or operates it for a long period, paid by the public client or by users.
EOI (expression of interest): A first step in which firms show interest and basic qualifications; a shortlist is then invited to bid or propose.
EPC: Engineering, procurement and construction: one contractor designs, buys the equipment and materials, and builds the facility, common in energy and industrial projects.
FEED: Front-end engineering design – the stage that defines a process plant in enough detail to estimate cost and tender the EPC contract.
Framework agreement: An agreement that pre-selects one or more contractors for a period; individual jobs are then called off without a full new tender.
ITB / IFB / RFB: Invitation to bid, invitation for bids, request for bids – the formal invitation to submit priced offers.
L1: Lowest evaluated bidder, a term used widely in South Asia. Being L1 normally precedes the award, but it is not the award itself.
Liquidated damages (LDs): A pre-agreed amount the contractor pays for each day or week of delay, usually capped as a percentage of the contract value.
LSTK: Lump-sum turnkey: a fixed price for a facility handed over ready to operate.
Performance bond: A bank guarantee, often 5–10% of the contract value, that the client can call if the contractor fails to perform.
Pre-qualification (PQ): An assessment of firms' experience, finances and resources before the tender, so that only qualified firms are invited to bid.
Retention: A percentage of each payment held back by the client (or main contractor) until completion or the end of the defects period.
RFI: Request for information – used both by clients sounding out the market before a tender and by contractors asking questions during a project.
RFP: Request for proposals, typically used where technical approach matters as much as price, such as consultancy or design-build.
RFQ: Request for quotation – a simpler price request, often for supplies or small works.
Standstill period: A short period between announcing the intended winner and signing the contract, during which unsuccessful bidders can challenge the decision.
Back-to-back subcontract: A subcontract that passes the main contract's terms – payment, liabilities, programme – down to the subcontractor.

Written by the Tender Leads Daily editorial team. This guide is general information, not legal or financial advice – procurement rules differ by country and buyer, so always follow the official tender documents.