What Do Contractors Mean by Backlog, Retainage, and Job Costing?
The bank asks for your backlog. The general contractor holds retainage. Your bookkeeper wants job costing. None of it was in trade school.
This glossary explains the construction business terms used across the 2027 construction trends, one short definition at a time.
Builders, remodelers, and trade contractors fill a good share of Dr. Paul’s 1,000+ client list.
Talk to Dr. PaulCall or text (321) 948-9588.
Last Updated: November 2026
Real World Help From Dr. Paul
How This Guide Works
Need one answer fast? Find the term below. Each has a plain definition and a link to the trend or guide that uses it. Like a story better? Blueprint Bella, the beaver builder from Dr. Paul’s Fabled Forest Business School Series, runs into retainage after the list.
Backlog through Split market, grouped by topic.
What Does Each Construction Term Mean?
From backlog to split market, each entry is short enough to read in under a minute, and 5 point to a deeper guide on Quality Business Plan.
Backlog
Signed work you have not finished yet, in dollars. Lenders and bonding companies watch it. A shrinking backlog is an early warning.
Bid
Your price to do a job, based on an estimate of labor, materials, equipment, overhead, and profit. A bid without overhead in it loses money even when you win.
Cancellation clause
Contract language that says what happens if the client walks away. It should cover work done, materials bought, and a fee.
Used on: What to do when a client cancels
Change order
A signed change to the scope or price of a job after it starts. Extra work without one is often work you never get paid for.
Used on: 2027 construction trends | Full change order guide →
Escalation clause
Contract language that lets your price rise if material costs jump past a set point. It matters when tariffs move prices mid-job.
Heat illness prevention plan
A written plan for water, rest, shade, and watching new workers when it gets hot. OSHA has proposed a federal rule. It is not final yet.
Infrastructure funding
Federal money for roads, bridges, and water projects. The main law expired September 30, 2026 and was extended to December 11, 2026. Watch for what comes next.
Job costing
Tracking every dollar of labor, material, and equipment against each job. It shows which jobs made money and which only felt busy.
Used on: 2027 construction trends | Full job costing guide →
Markup vs. margin
Markup is what you add on top of cost. Margin is the share of the price that is profit. A 20% markup is not a 20% margin.
Overhead rate
Your office, trucks, insurance, and other costs not tied to one job, spread across your jobs. Leave it out of a bid and every job runs short.
Prefabrication
Building parts in a shop and installing them on site. It can cut site time and weather delays.
Retainage
Money the client holds back, often until the job is done. It can tie up cash you already earned, so plan payroll without it.
Used on: 2027 construction trends | Full retainage guide →
Split market
When some kinds of construction grow while others slow. In 2027 that means picking the sectors you bid on with care.
Used on: 2027 construction trends
From the Fabled Forest
Where Did Bella’s Last Payment Go?
Blueprint Bella finished the heron’s dock and sent her final bill. The check came in short. The heron pointed to the contract: retainage, held back until the punch list was done. Bella had planned her next payroll around that money. It was a fire, so they reached for Dr. Paul’s Organize-Plan-Grow™ Strategy. She listed every job with money held back, planned payroll around what was actually in the bank, and wrote a punch-list date into every contract after that.
Busy Crew, Thin Bank Account?
Bring your last three jobs, and Dr. Paul will show you which numbers to fix first.
Or call or text (321) 948-9588.
Where Should You Go Next?
Read the 2027 construction trends to see escalation clause at work, or open the construction company template. The trends hub covers nine more industries.
About the Author
Contractors call Dr. Paul Borosky when the work is good and the bank balance isn’t. A DBA and MBA in Finance, plus 1,000+ small business clients, shaped these definitions for owners who would rather be on the job site.
Sources
- Congressional Research Service, Congressional Votes on Surface Transportation Authorizations (September 11, 2026).
- DLA Piper, OSHA’s proposed heat rule (April 6, 2026).