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Purchase Order Process

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: AP Team, Project Managers, Superintendents, Purchasing

Purpose​

Establish a consistent purchase order process to control costs, ensure proper authorization, document commitments, and support project accounting.

When Purchase Orders Are Required​

Required (No Exceptions)​

  • Subcontractor agreements (use Subcontract instead)
  • Material purchases over $500
  • Equipment rentals over $500
  • Professional services (engineering, surveying, testing)
  • Any recurring purchases

Optional (Best Practice)​

  • Material purchases $100-$500
  • Small tool purchases
  • Miscellaneous supplies

Not Required​

  • Petty cash purchases under $100
  • Emergency purchases (create PO after, document emergency)
  • Utility payments
  • Permit fees

Purchase Order Workflow​

Step 1: Request Initiation​

Who: Field Personnel (Foreman, Super) or PM
How: Purchase Request Form or email to Purchasing

Required Information:

  • Project name and number
  • Cost code
  • Item description (detailed)
  • Quantity needed
  • Delivery date required
  • Delivery location
  • Preferred vendor (if any)
  • Budget reference

Step 2: Approval​

Based on Estimated Amount:

AmountRequired Approval
$0 - $500Foreman
$501 - $5,000Superintendent
$5,001 - $25,000Project Manager
$25,001 - $100,000Operations Manager
$100,001+Executive/Owner

Approval Considerations:

  • Is item in budget?
  • Is quantity appropriate?
  • Is vendor approved?
  • Is timing appropriate?
  • Better pricing available?

Step 3: Vendor Selection​

Approved Vendor List:

  • Check approved vendor database first
  • New vendors require setup (see Vendor Setup procedure)

Obtaining Quotes:

Purchase AmountQuote Requirements
Under $5,0001 quote acceptable
$5,000 - $25,000Minimum 2 quotes
Over $25,000Minimum 3 quotes

Quote Documentation:

  • Written quotes required
  • Include freight/delivery
  • Note lead times
  • Verify insurance requirements met

Step 4: PO Creation​

PO Required Information:

  • PO Number (auto-generated)
  • Date
  • Project name and number
  • Vendor name and address
  • Ship-to address
  • Required delivery date
  • Payment terms
  • Tax status

Line Items​

  • Line number
  • Description (be specific)
  • Quantity
  • Unit of measure
  • Unit price
  • Extended price
  • Cost code

Terms & Conditions​

  • Standard T&C reference
  • Special conditions
  • Insurance requirements
  • Lien waiver requirements

Approvals​

  • Requestor signature
  • Approver signature
  • Date

Step 5: PO Distribution​

Send PO to:

  1. Vendor (email preferred, confirm receipt)
  2. Project Manager (copy)
  3. Site (for receiving)
  4. AP (for invoice matching)
  5. File (project PO log)

Step 6: Receiving​

When Materials Arrive:

  1. Check delivery against PO:

    • Correct items?
    • Correct quantities?
    • Condition acceptable?

  2. Document receipt:

    • Sign delivery ticket
    • Note any discrepancies
    • Take photos (recommended)

  3. Report issues immediately:

    • Short shipment
    • Damaged goods
    • Wrong items

  4. Send receiving confirmation to AP

Step 7: Invoice Processing​

Three-Way Match:

  1. Purchase Order (what was ordered)
  2. Receiving Document (what was received)
  3. Invoice (what vendor charged)

All three must match before payment.

PO Change Orders​

When PO Changes Are Needed​

  • Quantity increase/decrease
  • Price change
  • Additional items
  • Scope modification

Process​

  1. Document reason for change
  2. Obtain appropriate approval (based on new total)
  3. Issue PO Change Order or revised PO
  4. Distribute to all parties
  5. Update commitment log

PO Best Practices​

DO:​

✅ Create PO BEFORE ordering
✅ Be specific in descriptions
✅ Include delivery requirements
✅ Reference specifications/drawings
✅ Document verbal orders with follow-up PO
✅ Track all open POs weekly
✅ Close completed POs promptly

DON'T:​

❌ Order without PO (except emergency)
❌ Use vague descriptions ("materials")
❌ Approve over budget without review
❌ Split orders to avoid approval limits
❌ Pay without proper receiving documentation

Emergency Purchases​

Definition: Immediate need where waiting for PO would cause:

  • Safety hazard
  • Project shutdown
  • Significant delay/damage

Process:

  1. Verbal approval from PM or higher
  2. Make purchase
  3. Create PO within 24 hours marked "CONFIRMING"
  4. Document emergency circumstances
  5. Attach receipts/invoices

Commitment Tracking​

Weekly Review:

  • Open POs by project
  • Committed vs. budget
  • Upcoming deliveries
  • POs pending closure

Monthly Report:

  • Total commitments by project
  • Budget variance analysis
  • Vendor performance
  • Pricing trends

Purchase Order Sample Format​

=====================================
PURCHASE ORDER
=====================================
PO Number: PO-2026-0001
Date: February 1, 2026
Page: 1 of 1

VENDOR:                          SHIP TO:
ABC Materials, Inc.              [Project Site Address]
123 Supply Lane                  [City, State ZIP]
City, State ZIP                  
Attn: Sales Dept                 Attn: Site Super
Phone: (xxx) xxx-xxxx            

PROJECT: Downtown Office Building
PROJECT #: 2026-001
DELIVERY DATE: February 15, 2026
PAYMENT TERMS: Net 30
TAX STATUS: Tax Exempt (Cert #XXXXX)

-------------------------------------
LINE | DESCRIPTION      | QTY | UOM | UNIT PRICE | EXTENDED | COST CODE
-------------------------------------
1    | 1/2" Rebar #4   | 500 | LF  | $0.85      | $425.00  | 03-200
2    | 3/4" Rebar #6   | 300 | LF  | $1.25      | $375.00  | 03-200
3    | Rebar Ties      | 10  | Box | $15.00     | $150.00  | 03-200
-------------------------------------
                              SUBTOTAL: $950.00
                                   TAX: $0.00
                              FREIGHT: $75.00
                         TOTAL PO: $1,025.00
-------------------------------------

SPECIAL INSTRUCTIONS:
- Deliver to laydown area, north side of site
- Call 30 minutes before delivery
- Lien waiver required with invoice

STANDARD TERMS & CONDITIONS APPLY (See attached)

Requested By: _________________ Date: _______

Approved By: __________________ Date: _______

=====================================
  • Approved Vendor List
  • Vendor Setup Procedure
  • Invoice Processing Procedure
  • Budget Management Guide
  • Cost Code Structure

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