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Hi, my name is Niall from LiveCosts. Today, we are going to talk about what is purchase order software and how it works?
Jumping straight into LiveCosts, we start on a project dashboard and focus on a demo project where budgets have been broken down by elements; today, we will concentrate on the roofing budget. We create a committed cost by generating a new purchase order, selecting a supplier, assigning it to the demo project’s roofing budget, and specifying materials and delivery dates.
Using AI import, we can extract data from PDFs, JPEGs, or images of quotations, matching product codes against our catalog to identify price changes. Once the order is created and sent, a unique purchase order number is generated. All purchase orders can be sorted by project, budget, supplier, or creator.
Within the demo project’s roofing element, the cost appears as an open commitment, immediately visible in the system. The process can also be managed via the mobile app, which allows creating orders, tracking deliveries, uploading photographs of damaged goods or delivery notes, and checking off received items.
All delivery data syncs back to the main software, keeping everything organized in the deliveries section, where deliveries are linked directly to purchase orders, marked as delivered, and logged with detailed records of what was ordered, delivered, and when.
If this process sounds beneficial, please feel free to visit our website to book a demo or watch a more detailed walkthrough.
Construction purchase order software is a digital system for managing how materials, plant and services are ordered for construction projects.
It gives contractors a structured purchasing process for raising orders, getting spending authorised, issuing POs to suppliers and keeping track of what reaches site. Because each order can be linked to the project it belongs to, teams also know how much money has already been committed before the corresponding supplier invoices arrive.
This is particularly useful when purchasing is spread across several projects, sites, suppliers and members of staff.
LiveCosts is construction purchase order software. The video above shows the purchasing process inside LiveCosts, including raising an order against a project, recording the commitment and following the order through to delivery.
What is a Purchase Order in Construction?
A construction purchase order (PO) is a formal record of an order placed with a supplier for materials, plant, equipment or services.
It normally confirms information such as:
- PO number
- Supplier
- Project or site
- Items or services ordered
- Quantities
- Agreed rates and prices
- Delivery location
- Required delivery date
- Relevant cost code or budget heading
Using a PO gives both the contractor and supplier a record of what has been agreed before goods are supplied or an invoice is submitted.
For construction businesses, it also provides a way to connect purchasing decisions back to the commercial position of the project.
How Does Construction Purchase Order Software Work?
Purchase order software creates a controlled path between someone identifying a requirement on site and the resulting supplier cost entering the business.
The exact process varies between contractors, but it can include:
Request
A site manager, project manager or other team member identifies materials, plant or services that are required.
Authorisation
Where purchasing controls are in place, the request can be reviewed before money is committed. This helps prevent unauthorised orders and gives commercial teams greater oversight of project spending.
Order
An approved purchase order is issued to the selected supplier with the agreed quantities, rates and delivery information.
Commitment
The value of the order is recognised against the appropriate project budget or cost code, even though no supplier invoice has been received yet.
Receipt
When the goods arrive, site teams can record what was received and identify shortages, part deliveries or damaged items.
Reconciliation
The supplier’s invoice can later be checked against the original order and goods received before it moves into the accounts process.
This gives contractors an auditable purchasing trail instead of relying on separate emails, spreadsheets, phone calls and paperwork.
Why Are Committed Costs Important?
A purchase creates a financial obligation before it creates an accounting transaction.
For example, suppose a contractor has £40,000 available for a package of materials and issues purchase orders worth £15,000.
Those supplier invoices may not arrive for another few weeks. Looking only at invoiced expenditure could therefore give the impression that considerably more money remains available.
The £15,000 already ordered needs to be recognised as a committed cost.
Recording commitments as orders are placed gives project and commercial teams a more realistic picture of future expenditure and helps prevent additional purchasing against money that has effectively already been spent.
How Do Purchase Orders Support CVR?
For UK contractors, committed purchasing information can also feed into Cost Value Reconciliation (CVR).
A CVR compares the value generated by a construction project with the costs associated with delivering that work. To understand the project’s commercial position properly, teams need visibility beyond costs that have already appeared as supplier invoices.
Open purchase orders can represent expenditure the business is already committed to.
Including those commitments alongside actual costs, forecasts, variations and project value gives quantity surveyors and commercial teams better information when reviewing expected cost and margin.
This makes accurate purchasing records useful beyond procurement itself: they become part of the commercial information used to understand where the contract is heading financially.
How Does Construction PO Software Help With Deliveries?
Construction purchasing does not finish when a supplier receives the order.
Materials still need to arrive at the correct site, in the right quantities and in acceptable condition.
Digital PO software can connect site receipts with the original supplier order so teams can record:
- Full and part deliveries
- Quantities received
- Outstanding quantities
- Delivery dates
- Delivery notes
- Goods Received Notes (GRNs)
- Damaged or incorrect goods
- Supporting photographs
This creates a record of what actually arrived rather than assuming that everything listed on the supplier’s paperwork was received.
Mobile access is particularly useful here because site teams can record the delivery when it happens instead of sending paperwork back to the office for somebody else to update.
What is 3-Way Matching?
3-way matching compares three documents associated with a purchase:
Purchase Order → Goods Received / Delivery Record → Supplier Invoice
Each answers a different question:
Purchase order: What did we agree to buy?
Delivery record or GRN: What did the site actually receive?
Supplier invoice: What are we being charged for?
Checking these records together can reveal quantity differences, incorrect rates, missing goods or other discrepancies before an invoice is approved.
For example, if a PO was raised for 50 units but the site recorded only 40 as delivered, the difference can be investigated when the invoice arrives.
For contractors processing large numbers of supplier invoices, having this information connected digitally can make invoice checking much more reliable than searching through emails and paper delivery notes.
Why Use Software Instead of Spreadsheets and Paper POs?
A basic PO can easily be created using a spreadsheet or document template.
The challenge is controlling what happens around it.
As purchasing volume grows, contractors may have orders being requested from several sites, approved by different people and fulfilled by multiple suppliers. Delivery notes may remain on site while invoices arrive separately with the accounts team.
This can leave important information scattered between:
- Spreadsheets
- Email inboxes
- WhatsApp messages
- Supplier quotations
- Paper POs
- Site delivery notes
- Accounts systems
Construction purchase order software keeps these stages connected.
Teams can establish who requested an order, who approved it, what was sent to the supplier, what was committed against the project and what subsequently arrived.
The result is greater control over the purchasing process, not simply a more convenient way to generate a PO document.
How Does LiveCosts Manage Construction Purchase Orders?
LiveCosts provides contractors with a purchasing workflow connected to their construction projects.
Purchase orders can be raised for the relevant job and allocated to the appropriate budget heading, allowing the order value to be recognised as a commitment when the purchase is made.
Teams can raise orders from the office or use mobile workflows for purchasing activity taking place on site. Supplier quotations can also be imported into LiveCosts, reducing the amount of information that needs to be manually entered when preparing an order.
Once materials arrive, site teams can record deliveries against the PO, including part deliveries, delivery documentation and photographs where something is damaged or incorrect.
When the supplier invoice arrives, the purchasing history provides the information needed to check what was originally ordered and received.
This creates a connected LiveCosts purchasing flow:
Request → Approval → Purchase Order → Commitment → Delivery → Invoice Check
Because those commitments remain associated with the relevant project, the purchasing data can also contribute to wider commercial oversight, including CVR, WIP and margin reviews.
LiveCosts integrates with accounting platforms including Xero, QuickBooks and Sage, allowing approved purchasing and invoice information to continue into the accounts process without separating project procurement from financial administration.
Note: The video at the top of this page shows this workflow in practice and demonstrates how LiveCosts manages construction purchasing from the initial order through to site delivery.
