A Purchase Order (PO) is a formal document issued by a buyer authorizing the purchase of goods or services. It is a key tool for managing project budgets and tracking financial commitments.

How Purchase Orders Help Control Costs

In construction, POs are used to ensure that all material purchases and subcontracted services are formally approved and accounted for. They provide clarity on project expenses, making it easier to track spending and prevent unauthorized purchases. POs also support budget tracking by allowing contractors to see how much of the project budget has been committed to various supplies or services.

Best Practices for Using Purchase Orders

To maintain control over spending, contractors should issue a PO for every significant purchase or subcontract. Each PO should detail the items or services being purchased, along with the price, quantity, and payment terms. This helps maintain an accurate record of project costs and prevents budget overruns. Related Terms: Supplier, Subcontract, Invoice Reconciliation

FAQs

What is the purpose of a Purchase Order in construction?

A: A PO authorizes the purchase of goods or services, ensuring that every expense is approved and tracked for better budget management.

How does a PO help manage project budgets?

A: A PO helps contractors track spending and prevent unauthorized purchases by providing a formal record of each transaction.

Purchase Order (PO) Definition

How Purchase Orders Help Control Costs

Best Practices for Using Purchase Orders

FAQs

What is the purpose of a Purchase Order in construction?

How does a PO help manage project budgets?

Just upload your starting project budget, and follow the financial progress in real-time