The secret to saving money on construction materials 

There are Currently two main challenges for the construction industry 1. material supply and 2. material costs. Purchase orders ensure that construction projects have the correct materials at the right time and can help avoid costly delays. However, the last two years have caused havoc with supply chains, causing issues for even the best-planned construction projects.

A purchase order within the construction industry is a detailed agreement between a project owner and a supplier regarding the quantity and cost of materials for a specific project. A purchase order must include a description of materials or equipment, the quantity being purchased, the agreed-upon price, terms of payment, and delivery dates. A purchase order is legally binding when signed by the buyer and seller.

With the right software for your business, you can track these purchase orders closely, giving you timely and accurate access to existing, upcoming, and committed costs.

So why are purchase orders the secret to saving money on your projects?

In times of extreme volatility (thank you, Covid-19), construction material costs and availability can fluctuate, and a purchase order can be a safety net for your business and projects.

A purchase order cements your intent to buy a set quantity of materials for your construction project at a specific fixed price. This can be incredibly beneficial for your business when the costs of materials rise suddenly.

With the building sector continuing to boom and the lack of readily available materials, purchase orders are being utilised much more intensely than ever before.  

The downside to Purchase Orders

Purchase Orders have been used in the construction industry for a long time; whilst they can provide savings, they can also prove to be cumbersome and time-intensive if not appropriately implemented into your business’s day-to-day running.

The first problem with purchase orders is knowing exactly how much material you will need for your project, and this requires accurate estimating processes that you trust. Without accurate estimates, purchase orders are basically just a stab in the dark and could end up costing you a lot more money. 

If your company is currently still using spreadsheets and several different pieces of software to manage estimates and project accounting, you could find yourself struggling to use purchase orders positively. With information becoming quickly outdated or not being updated in all systems, you can not rely on your numbers to place accurate orders. 

Staying profitable using Purchase Orders

If your business simply relies on a steady flow of work and consistent material costs to judge your profitability, you are indeed heading for trouble. 

The importance of real-time, accurate data in your construction business is more important now than ever. Having access to this information will allow you to create purchase orders that lock in reasonable prices and give you an accurate view of your project costings, outgoings and expected costs.  

Construction software has come a long way in the last 20 years, and the days of using spreadsheets and emails to keep track of your projects should be a thing of the past. There are much better industry-specific solutions that are now available to you. Using a construction-specific software program means you have greater visibility over all aspects of your project at all times. Project and financial planners have accurate, timely information at their fingertips and a deeper understanding of their actual project costs and resource allocation.

IPM, for example, gives you the ability to create a Purchase Order using the information entered in an estimate; this then creates workflows for the financial side of the business and field teams. IPM can also be customised to receive vendor price feeds, ensuring that a PO can be created with the latest and best pricing.

Purchase orders are a vital part of the construction process, but now more than ever, they can be an opportunity to increase the profitability of your bottom line – as long as you’re using a modern approach with solid, connected data!

If you would like to discuss streamlining your data and how you could better utilise purchase orders within your business, talk to the Construction Industry experts at Thrive on 1300 868 474.

Thrive Technologies