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