How to use purchase orders on a construction job (free construction purchase order template)

Download the construction purchase order template

Download the construction purchase order template (Excel, .xlsx). No sign-up and no email. It opens in Excel and in Google Sheets: in Google Drive choose New, then File upload, then open the file with Google Sheets.

One file for your company, with these tabs:

• Purchase Order — a printable PO: your details, the supplier, the delivery address, the date it is needed, the job and cost code, line items, tax, delivery and the total, your terms, and who approved it.
• PO Log — every PO with its status, who approved it and a sub’s insurance date, and what has been received, billed and paid against it. It works out what is still committed and what you owe, and flags a bill that is more than the PO or more than what arrived, a late delivery, a big PO without the owner’s approval, and a sub with lapsed insurance.
• Activity — one row each time goods arrive, a bill comes in or you pay, against the PO number.
• Budget, Summary, Setup, Checklist and Start Here — billed and committed cost against each job’s budget by cost code, the flagged POs, your details and approval limit, and how to use the file.

Blue text is what you type. Black text is a formula. Yellow cells are settings. The sample company has two jobs and eight POs: a bill for more than its PO, a supplier that billed for doors it has not delivered, a subcontractor whose insurance has lapsed, and a countertop order waiting for the owner to approve it. Its dates are set from today, so the flags keep showing; type your own over them.

What a purchase order is, and why the paper matters

A purchase order is your offer to buy. Under the model text of the Uniform Commercial Code, an order to buy goods for prompt or current shipment invites the supplier to accept either by promptly promising to ship or by shipping. A supplier can accept your PO just by sending the goods. Cornell LII

The paper matters because a contract for the sale of goods for $500 or more is not enforceable unless there is a writing signed by the party it is enforced against. Between merchants, a written confirmation that the other side receives counts against them unless they object in writing within 10 days of receiving it. Cornell LII

The supplier’s confirmation often comes back with its own terms. An acceptance can still make a contract even when it states additional or different terms, and between merchants the additional terms become part of it unless your order expressly limits acceptance to its own terms, they materially alter it, or you object to them in time. Read every confirmation for terms that differ from your PO, and object in writing to any you do not accept. Cornell LII

What a construction purchase order should include

• The PO number and the date it was raised.
• Your company, and where the supplier sends the bill.
• The supplier or subcontractor, and their contact.
• The job and the cost code it is charged to.
• Each item: the description or part number, quantity, unit and unit price.
• Tax, delivery charges and the total.
• Where to deliver, the date it is needed on site, and a site contact.
• Your terms: the PO number on every ticket and bill, nothing billed that the PO does not cover, and how changes are agreed.
• Who approved it, and when.

The job and cost code are what make a PO useful after it is sent. They let the budget count the money the day the PO is approved, not weeks later when the bill arrives.

Approvals and committed cost

Set an amount above which the owner approves, and let project managers approve below it. The point is that nobody commits the company’s money without someone with the authority seeing it first. The template flags a PO over your limit that the owner has not approved.

Once approved, a PO is committed cost: money the job has promised but has not been billed for yet. Add it to cost to date in every job cost forecast, or a job can look under budget until the bills arrive. When the supplier bills, the bill becomes actual cost and the PO stops counting as committed for that amount.

For a subcontractor, check the insurance certificate before the PO is approved, not when the first bill comes in.

Deliveries, bills and the three-way match

When goods arrive, count them against the PO and note any shorts or damage on the delivery ticket before the driver leaves.

Before you pay a supplier’s bill, match three things: the PO, the delivery ticket and the bill. Quantities and prices should agree. A bill for more than the PO, or for goods that have not arrived, is held until the PO is changed or the rest is delivered.

A deposit paid with the order is easy to pay twice. Record it against the PO and pay the bill net of it.

Extras are where a PO earns its keep. A supplier who adds a delivery charge, or a sub who does extra work, should get a written change to the PO first. On your side of the job, the same extra may be a change order to the owner.

Paying suppliers on time

On federal construction contracts, every subcontract, including one with a material supplier, must commit the prime contractor to pay for satisfactory performance within 7 days of being paid itself. Acquisition.gov

Some states set deadlines for private work too. Our guide to why construction payments are late covers the causes of slow payment and what contractors can control.

Construction purchase order checklist

These are the checks on the template’s Checklist tab.

1. Is there a PO before anything is ordered?

   What a good answer sounds like: No PO number, no order. A phone order gets its PO the same day.

2. Does it name the job and cost code?

   What a good answer sounds like: So the budget counts it as committed the day it is approved.

3. Are price, quantity and delivery on it?

   What a good answer sounds like: Unit prices, quantities, tax, delivery charges and the date it is needed on site.

4. Did the right person approve it?

   What a good answer sounds like: Big POs go to the owner, and the approver’s name is on the PO.

5. Did the supplier confirm it?

   What a good answer sounds like: A written confirmation of price and date, read for terms that differ from yours.

6. Does a sub have current insurance?

   What a good answer sounds like: The certificate is on file and in date before the PO is approved.

7. Was the delivery checked against the PO?

   What a good answer sounds like: Counted and checked on arrival, with shorts and damage noted on the ticket.

8. Was the bill matched before it was paid?

   What a good answer sounds like: The PO, the delivery ticket and the bill agree on quantity and price.

9. Were extras a change to the PO first?

   What a good answer sounds like: Anything not on the PO is agreed in writing before it is billed.

10. Is the deposit recorded against the PO?

    What a good answer sounds like: So the bill is paid net of what was paid up front.

11. Are open POs in the forecast?

    What a good answer sounds like: Approved money that has not been billed is counted in the job cost forecast.

12. Are finished POs closed?

    What a good answer sounds like: Delivered, billed and paid: closed, so it stops counting as committed.

When a purchase order spreadsheet stops being enough

The template works for one company with someone keeping the log up to date. These are the signs it has been outgrown:

• POs are raised after the order is placed, to match a bill that has already come in.
• Nobody knows what is committed on a job until the bills arrive.
• Bills get paid without anyone checking what was delivered.
• A sub’s insurance lapses and the next PO goes out anyway.

At that point the PO belongs on the job, next to its budget, its bills and its supplier.

Where WorkHoist helps

WorkHoist raises purchase orders on the job, numbered PO-001 on, with each line tied to a line of the job’s budget, plus tax, a delivery charge, the delivery address and the date it is expected. A PO goes from draft to submitted to approved. Who can approve is set by role, admins and finance by default, and changing the money on an approved PO clears the approval, so it has to be approved again.

Approved POs count as committed cost on the job’s budget until the supplier’s bills land against their lines, so the forecast shows money promised as well as money spent. Receiving marks a PO partly or fully received, entering a bill for more than is left on its PO line shows a warning, and a deposit paid with the order is held against the PO and counted against its bills. The PO prints as a PDF to email to the supplier.

If the supplier is a subcontractor whose insurance or workers’ comp has lapsed, the PO can’t be approved without an override reason, which is logged. The bills against a PO, and the payments on them, go to QuickBooks Online, one way, when you click Send; the PO itself does not, so it won’t show in QuickBooks as an open purchase order.

Questions contractors ask

What should a construction purchase order include?

A construction purchase order should include the PO number and date, your company and where to send the bill, the supplier and their contact, the job and cost code, each item with its quantity, unit and unit price, tax and delivery charges, the total, the delivery address and the date it is needed on site, your terms, and who approved it.

Is a purchase order a contract?

A purchase order is an offer to buy. Under the model text of the Uniform Commercial Code, an order for prompt shipment can be accepted by a prompt promise to ship or by shipping, and once accepted it is a contract for the sale of goods. A sale of goods for $500 or more needs a signed writing to be enforced. Your state’s version of the code applies, so check it before relying on this.

What is committed cost in construction?

Committed cost is money a job has promised but has not been billed for yet, such as approved purchase orders and subcontracts. It belongs in every job cost forecast alongside cost to date. When the supplier bills, that amount becomes actual cost and stops counting as committed.

What is a three-way match?

A three-way match checks the purchase order, the delivery ticket and the supplier’s bill against each other before the bill is paid. Quantities and prices should agree. A bill for more than the PO, or for goods that have not arrived, is held until the PO is changed or the rest is delivered.

Who should approve a construction purchase order?

Set an amount above which the owner or another named person approves, and let project managers approve below it. The approver’s name and the date go on the PO, and a PO for a subcontractor should not be approved until the sub’s insurance certificate is current.

Is there a free construction purchase order template?

Yes. WorkHoist’s construction purchase order template is a free Excel file, with no sign-up or email, that also opens in Google Sheets. It has a printable PO, a PO log that tracks deliveries, bills and payments and flags mismatches, and a budget tab that counts approved POs as committed cost.