Main contractors manage material purchase orders (POs) by checking each request against the package budget, approving spend before ordering, controlling changes, recording deliveries and matching supplier invoices to the agreed order. Done consistently, this shows cost overruns while there is still time to act.
The process in six steps:
- Agree who owns each stage of the PO.
- Check the order against the package budget and the work still to buy.
- Raise and approve the PO before the supplier delivers.
- Approve changes and confirm revised orders with the supplier.
- Check deliveries and invoices against the PO and resolve differences.
- Review open POs regularly with site and commercial teams.
Once issued, a PO is also a committed cost: money the project has agreed to spend that the supplier has not yet invoiced. A package is a budget section for a defined scope of work, such as groundworks or brickwork. Tracking commitments against each package shows the true cost position before invoices arrive.
Where Material POs Problems Eat into Project Margins?
Material overspend often builds through small gaps between teams. The site requests materials without checking an existing order. A buyer accepts a substitute at a higher rate. Accounts receive an invoice with no evidence of a short delivery.
A PO records what the team agreed to buy. Protecting margin also means someone checks changes, investigates differences and closes outstanding issues. The aim is to keep material purchasing tied to the work allowance, from the first request to the final supplier credit.
Who Is Responsible for Material POs on a Construction Project?
Responsibility is shared across site, buying, commercial and finance teams. Each needs a clear role to eliminate missed tasks.
What Site Teams Request and Confirm
Site teams state the specification, quantity, delivery location and required date, after checking what is already on site and on order. On delivery, they record actual quantities and condition. A signature alone gives finance little to work with if the supplier later bills for missing or damaged goods.
What Buying and Commercial Teams Check
The buyer checks rates, availability, delivery charges and terms. The quantity surveyor (QS) or commercial manager checks the order against the package allowance and the remaining work. An order within a buyer’s authority may still need commercial review if it exceeds the allowance or changes the specified material.
What Finance Needs Before Approving Invoices
Finance needs the PO reference, delivery evidence and a record of approved changes. When an invoice differs, name the person responsible for resolving it. Otherwise, Accounts queries the invoice, the site assumes the buyer will respond, and the issue stays open.
How to Check a Material Order Against Budget?
Compare every request with the package allowance, recorded costs, outstanding commitments, and the materials still needed to finish.
Confirm What Is Needed and What Is Already on Order
Before raising a PO, compare the request with the requirement, site stock and outstanding orders, and check nobody has already ordered the same goods. Separate a new requirement from a replacement or delayed delivery, because reordering late materials can leave the project paying twice.
Include the full purchase cost too. Carriage, minimum order charges and urgent delivery fees can change which quotation is cheaper. See how to check material prices before ordering for a LiveCosts walkthrough.
Allow for Materials Still Needed to Complete the Work
A package can have money left unallocated and still face an overrun. Suppose the materials allowance is £50,000, recorded costs are £20,000 and outstanding commitments are £18,000. That leaves £12,000 unallocated. If the remaining materials will cost £15,000, the package already faces a £3,000 shortfall.
Approval must consider that remaining requirement, or an order can look affordable while leaving too little to finish. For the cost treatment behind this, read how POs update committed costs.
How to Raise and Approve Material POs Before Ordering
Raise the PO and get approval before the supplier is told to deliver. Link it to the correct project, package or cost code so the cost reaches the right budget.
What a Material PO Should Include
- Material description, specification and product code where relevant.
- Quantity, unit of measurement and agreed unit rate.
- Delivery charges, location and required dates.
- Supplier quotation reference and agreed terms.
Check units carefully, as a price per pack can look cheaper than a price per item until quantities are compared. Ask the supplier to confirm the order and flag differences before dispatch.
Escalate Orders That Exceed Approval Limits
Set approval limits that reflect purchasing responsibility and commercial risk, and say who reviews orders above them and who can approve a budget exception. The approver should see why the spend is needed, its effect on the package and any alternatives.
Splitting a purchase into smaller orders should not bypass review. For urgent purchases, provide a fast escalation route, since site teams need a usable process when waiting could stop work.
How to Manage PO Changes Without Losing the Original Agreement
Record every change to quantity, specification or price, get it approved and confirm it with the supplier in writing.
Get Approval for Extra Quantities and Substitutions
Extra quantities, changed specifications and substitutions can alter cost after the original approval. Record the reason and value of each change, confirm any technical approval for a substitute, then review the commercial effect.
Identify whether extra materials stem from changed client scope, waste, damage or an estimating shortfall, as each needs different follow up. Linking an order to a potential variation supports the record but does not establish payment entitlement.
Confirm Revised Orders with the Supplier
Send a clear revised order that shows what changed, and keep the original so the agreement can be traced. State whether the revision replaces outstanding quantities or adds to them, otherwise the supplier may treat it as a new order. Site and finance should see the current version, since the buyer’s email trail should not be the only record of an agreed price increase.
How to Resolve Delivery and Invoice Problems Before They Add Cost
Compare each delivery and invoice with the PO, record every difference and give each one an owner until it is closed.
Deal with Short Deliveries, Damage and Replacement Orders
Check delivered goods against the order and note shortages, wrong items and damage while the details are fresh. Photographs and marked delivery notes help the buyer raise a clear query.
Confirm whether missing goods stay on backorder or need a separate purchase, and establish what the supplier will replace or collect before ordering replacements. Otherwise the project may carry the original charge, the replacement and unwanted stock together. Where one PO covers several drops, keep a running record of receipts, as shown in how to track multiple deliveries against one PO.
Follow Up Price Differences, Returns and Supplier Credits
Compare the invoice with the PO and delivery record, checking quantities, rates, carriage and extra charges. Assign each difference to someone who can resolve it: a buyer may need to confirm an agreed price, or site may need to verify a delivery.
Track returns until the supplier issues the agreed credit, because sending goods back does not complete the financial correction. The construction accounts payable guide covers the wider invoice approval and payment process.
How to Review Open Material POs with Site and Commercial Teams
Review open orders regularly, prioritizing high-value packages and critical materials.
Identify Delayed, Duplicate and Unneeded Orders
For each exception, agree an action and an owner: chase a delivery, confirm a revised date, investigate a duplicate or cancel goods no longer needed. Confirm cancellations with the supplier before removing the expected cost, and check for any cancellation or restocking charge. Leaving old POs open makes it difficult to track whether a delivery is truly finished.
Check Whether Outstanding Orders Cover the Remaining Work
An open order list shows what has been ordered, but the team must also check remaining orders. Ask the site and the QS whether outstanding quantities cover the remaining work, allowing for changed requirements, expected waste and packages nearing completion.
Feed cost changes into the project forecast. Buying below the allowance on one order proves nothing if later orders will use the balance.
Worked Example: The Same Material Order, With and Without PO Control
Imagine a main contractor delivering a £500,000 project with a £40,000 materials allowance for one package. Recorded costs are £18,000, outstanding commitments are £12,000, and the contractor expects to need another £8,000 of materials. The forecast is £38,000, leaving £2,000 headroom.
The site manager requests a £4,000 order. £1,500 of it duplicates materials already due on an existing PO, and the other £2,500 is part of the £8,000 still to buy. The supplier later invoices at a rate £200 above the PO.
| Stage | Without PO control | With PO control |
| Request | Ordered straight away for £4,000 | Checked against existing orders before approval |
| Duplicate | £1,500 of materials bought twice | Spotted and removed, so only £2,500 is ordered |
| Invoice | £200 rate difference paid unnoticed | Queried and resolved before approval |
| Forecast | £39,700 | £38,000 |
| Headroom | £300 | £2,000 |
Without control, the package loses £1,700 of its £2,000 headroom on one order, and nobody notices until the final account. With control, the buyer removes the duplicate, the quantity surveyor confirms the £2,500 sits within the forecast, and finance catches the rate difference before approval. The £2,000 headroom stays intact.
How LiveCosts Keeps Material POs Tied to Budget, Approval and Delivery
These problems arise when requests, orders, and delivery evidence sit outside the project cost record. LiveCosts keeps your project teams aligned. It tracks requests, orders, deliveries, and invoices in one shared place.
Route Site Requests for Approval by Budget and Threshold Before Ordering
Site teams and quantity surveyors submit digital purchase requests, which route automatically by project budget, department rules or order threshold, so spend is authorised before the order reaches the supplier.
See Committed Cost the Moment a PO Is Raised
Generating a PO records an open commitment against the project, trade or cost codes. The team can check spend before the invoice arrives and review it against the budget.
Match Invoices, Delivery Receipts and POs Automatically
Automated 3-way matching flags errors or overbilling before approving an invoice. It automatically cross-checks:
- Supplier invoices
- Delivery receipts
- Original POs
Raise Orders and Confirm Deliveries from Site on Mobile
Field teams can raise orders from a smartphone or tablet, upload photographs of delivery notes or damaged goods and sign off material drops, keeping site evidence connected to purchasing.
See construction purchase order software for the full workflow.
Frequently Asked Questions
How Should Main Contractors Handle Urgent Site Purchases?
Use a fast approval route with a named approver. Record the project, materials, supplier, value and reason for urgency. Raise the PO before ordering wherever possible, and review any exception promptly so urgent purchases stay visible.
How Should Material POs Be Split Across Projects?
Allocate each project’s quantities and costs clearly, including an agreed share of delivery charges. Use separate POs where that makes receipt and invoice checks clearer. If one order serves several sites, keep enough detail to trace each delivery and cost allocation.
What Should Happen When a Supplier Changes an Agreed Price?
Check the original quotation, order and agreed terms, and ask the supplier to explain the difference before accepting a revision. Record any approved change, update the purchasing record and review its effect on the package forecast.
