Purchase order approvals before material hits site

On many sites, material arrives before finance sees a PO. When requisitions live in WhatsApp, commercial teams reconcile after the fact, and margin disappears quietly.

What to govern in PO workflows

• Every order tied to a project and its budget before it is placed
• The right person agrees before money is committed
• Money paid ahead to a supplier remembered when their bill arrives
• A record of who changed a quantity or a rate, and when

Smart Construction ties purchasing to the project budget, so site and head office agree before anything is paid. See our commercial solution or book a demo.

The order that was never written down

The most common procurement failure on a Pakistani site is not overpaying. It is the order that existed as a phone call. Site needed steel, someone called a supplier, the material arrived, and the paperwork was created weeks later from an invoice, if at all.

Everything downstream inherits that. Nobody can check the invoice quantity because nothing recorded what was ordered. Nobody can check the rate because nothing recorded what was agreed. And the project budget knew nothing about the commitment until the money was already spent.

Committed cost is the whole point

This is the concept worth internalising, because it separates contractors who control cost from contractors who report it. Committed cost is money a project is already obligated to spend through released orders and subcontracts, whether or not an invoice has arrived.

A contractor tracking only invoices knows their position weeks after it was decided. A contractor tracking commitment knows it at the moment of decision, which is the only moment at which anything can be changed. Over-commitment caught at approval is a conversation about specification. The same over-commitment caught at invoice is a fact you now have to fund.

Comparative statements: not bureaucracy

Comparing quotations before award has a reputation as a compliance exercise, which undersells it. It does three things at once. It gets a better price, because suppliers price differently when they know they are being compared. It records the basis for a decision, which is what an auditor or a client asks for later. And it protects the person who made the award from a question years afterwards.

The practical rule most contractors settle on is a value threshold: below it, award directly; above it, compare. Setting that threshold explicitly is more useful than leaving it to judgement, because judgement varies by who is busy that week.

Goods received: the check nobody skips twice

Recording what physically arrived, against the order that ordered it, is what makes a supplier bill checkable. Without it, you are approving payment on the supplier’s word about a delivery your store may or may not have received in full.

1. The order records the agreed quantity and rate
2. The goods received note records what actually arrived and was accepted
3. The supplier bill is checked against both before payment is approved
4. Anything returned is credited against the supplier, so what you owe stays right

This is the standard three-way match, and it is not sophisticated. It is simply the difference between paying what you owe and paying what you are asked for.

Approval limits that match the business

Approval routing works when the limits reflect how decisions genuinely get made. Set them too low and everything escalates, the chain becomes theatre, and people work around it. Set them too high and the control does nothing. The usual mistake is the first one, and the symptom is a director approving small material orders at eleven at night.