Purchase Orders in Construction 101

Snagging in Construction
Construction management

A purchase order in construction is similar to a contract, as it is a request from one person to another about purchasing an item.  While any purchase order can, and normally is, viewed as a contract, it should never be considered as a true contract.  The reason for this is that a contract is more detailed and includes products, prices, and terms and conditions of the project.  While a purchase order can include a couple of those same things, they are always a one-time contract that focuses only on the product that the purchase order is for. 

It can be quite confusing to those outside of the construction industry, or those who are just starting out, but it is necessary to keep these two items straight to avoid any conflict with a project later on!

Anyone who is filling out purchase orders in construction should ensure that they include the descriptions of the products, any technical aspects that may be necessary to know, the quantities that they want to order, the discounts that they will receive, and obviously the prices of the products.  It is also a good idea to include the shipment dates, as well as the expected payment terms, so that there is no confusion afterwards.  

Any purchase order in construction that is filled out completely, with as many details as possible, is going to be approved much faster than those that are missing pertinent information.  Therefore, every contractor should take care to make sure that each purchase order they create has the necessary information, because if not, that order will be returned requesting additional information. 

Once the person writing the purchase order out sends it to the other person to accept, and they do just that, the purchase order becomes a legally bound contract.  That means that there is no way for either party to break the contract, or purchase order, without a lawyer getting involved and the possibility of an impending lawsuit. 

Since purchase orders are so important in the construction industry, it is important that everyone keeps track of the purchase orders that they have sent out and which ones were accepted or denied.  Having these purchase orders handy and easy to find ensures that any issues can be addressed quickly and resolved immediately.  Whenever a purchase order goes missing, work on the project at hand can come to a stop, due to the fact that no one will want to continue until they know exactly what both parties want and need, and everything is back on track.  These delays can cause projects to go over budget and past the completion deadline, which are two things that neither party will want. 

Some contractors may not feel that it is necessary to complete a purchase order for every little item that they want or need to purchase, especially if they have been working with the other person for years.  However, it will only take one misunderstanding for a relationship to go sour, and purchase orders are created to avoid problems like that.

Of course, there are many problems when it comes to purchase orders in construction, but the major ones are how a contractor should store them.  While it is easy to say that they will be safe and sound in a manila file in a filing cabinet, that is not quite the truth.  Every project can have hundreds of purchase orders, which means finding the exact one that is needed within a sea of papers is next to impossible.  Plus, those papers are never where the contractor needs them to be, especially if he needs one of the purchase orders when he is on the job site. 

Thankfully, technology has come quite far in recent years, and purchase orders in construction can now be saved and stored online.  There are many different types of software that offers this solution to contractors and it can be used for more than just the storage too. 

Purchase order software can now be used to create purchase orders in construction, track those purchase orders to know when they have been approved or denied, and even track when the purchase orders have been completed with the products delivered and the purchase order paid in full. 

Purchase orders in construction are never going to go away, and in fact, they may get slightly more complicated since more information may be required for each one in the future.  However, contractors can feel a little relief knowing that software can help them keep track of it all and even help them fill most of each purchase order out.  This ensures that they won’t spend hours on purchase orders and nothing will fall through the cracks either. 

No one loves purchase orders in construction, since they can be time consuming and annoying.  However, since they can save “he said, they said” scenarios, every contractor should do their due diligence and have one for everything that they purchase. 

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