Final answer:
In the scientific method, a hypothesis is the proposed explanation formed after making an observation and before conducting experiments to test it.
Step-by-step explanation:
The step of the scientific method that involves constructing a proposed explanation of a phenomenon is known as formulating a hypothesis. This is the step where, after making an observation, scientists create a tentative explanation that can be tested through experimentation. The hypothesis helps to structure and direct experiments that will either support or refute the proposed explanation. It is a crucial part of the scientific process and differs from a theory, which is a well-supported explanation formed after substantial evidence and experimentation.