# iv. Contracts, Procurement & Cost Control Contracts, procurement, and cost control govern how construction work is scoped, priced, purchased, and financially managed. These mechanisms allocate risk, define responsibilities, and provide the controls needed to manage budgets and prevent cost overruns throughout a project. #### **Allowance** A predefined budget amount for a specific scope of work or material selection that has not yet been finalized. #### **Bid Package** A defined portion of work issued to subcontractors for pricing during procurement. #### **Change Order** A formal modification to the construction contract that adjusts scope, cost, or schedule. #### **Construction Contract** The legally binding agreement defining scope, price, responsibilities, and risk allocation between parties. #### **Contingency** Funds set aside to cover unforeseen costs or risks during construction. #### **Cost Breakdown Structure (CBS)** A hierarchical organization of project costs used for budgeting and tracking. #### **Guaranteed Maximum Price (GMP)** A contractual arrangement establishing an upper limit on construction costs, subject to approved changes. #### **Procurement Process** The method of sourcing labor, materials, and services required for construction. #### **Schedule of Values (SOV)** An itemized list of contract components used to allocate costs and process progress payments. #### **Subcontract Agreement** A contract between a general contractor and a subcontractor defining scope and compensation. #### **Value Engineering** A cost-optimization process that evaluates alternative materials or methods while maintaining performance and intent. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://info.building.inc/lexicon/development-and-construction/iv.-contracts-procurement-and-cost-control.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.