Managing a construction project, whether it’s a luxury custom home or a spec build, can be like walking a tightrope. You’ve got subs, fluctuating material costs, and deadlines all vying for your attention. That’s where Purchase Orders (POs) come in—your unsung hero for keeping everything on track, avoiding costly surprises, and making communication smoother.

In our recent episode of Builders, Budgets, and Beers, we spoke with Tyler Brabec, Founder of Brabec Custom Homes, about how POs transformed his business. No matter what kind of project you’re tackling, POs can give you the control you need to get things done more efficiently.

What Are Purchase Orders (POs) in Construction?

A Purchase Order (PO) is much more than just paperwork—it’s your secret weapon for keeping costs in check, managing scope, and avoiding miscommunications with vendors and subs. It locks in prices, clearly defines the scope of work, and helps prevent those last-minute surprises that can derail a project.

As a legal agreement between you and your vendor or subcontractor, it ensures that everyone knows exactly what’s expected, what materials or services are needed, when they should be delivered, and at what cost.

In construction, POs are especially critical because they help you:

• Lock in costs upfront, which is essential when dealing with volatile materials like lumber.
• Define the scope of work clearly, so there’s no room for miscommunication with subcontractors.
• Protect your margins by ensuring that any changes in price or scope are properly documented and accounted for.

Why Purchase Orders Are a Game Changer for All Builders

You might be thinking, “Do I really need POs for every project?” The short answer: Yes.

Without POs, many builders find themselves blindsided by rising costs, miscommunication with vendors, and chaotic financial tracking. A PO acts as a preemptive strike against these common issues. Tyler shared how, during the 2020-2021 pandemic, fluctuating prices for materials like lumber turned into a nightmare for builders not using POs. Builders were chasing their tails, trying to keep up with price changes that occurred almost daily. For them, implementing POs meant securing costs early, avoiding financial surprises, and improving trust with clients.

Even if you're working on a smaller project, POs help you stay on top of your costs and prevent overspending. Whether you're managing a $500,000 home or a $10 million commercial project, POs can help you avoid last-minute pricing changes and keep your project moving forward smoothly.

The Benefits of Using POs for Different Types of Contracts

Whether you’re working with fixed-price or cost-plus contracts, POs are essential for protecting your bottom line.

• For fixed-price contracts, POs help you lock in vendor and sub prices at the start of the project. That way, you avoid unexpected hikes and keep your profit margins intact. Any changes in scope or price can be easily documented and communicated.
• For cost-plus contracts, where costs can fluctuate, POs provide real-time tracking and documentation, allowing you to adjust budgets with change orders and maintain transparency with clients. As Tyler shared, on high-end custom home projects, POs make it easy to track changes and update budgets on the fly, keeping both you and the client informed and on the same page.

How POs Help You Manage Risk and Improve Communication

Using POs isn’t just about cost control—it’s also a critical tool for managing risk and keeping communication clear.

When you have a well-documented PO process, misunderstandings with subs and vendors are minimized. You’ve outlined the scope of work, costs, and expectations right from the start, so everyone is on the same page. This reduces the risk of conflicts down the road, whether it’s about a messy job site or missed deadlines.

POs also make client communication easier. By setting clear expectations upfront and documenting every change in the budget, you reduce client decision fatigue and avoid uncomfortable conversations about unexpected costs. With everything documented, you build trust—and that leads to smoother, more successful projects.

Why Some Builders Don’t Use POs

You might be wondering why some builders skip POs altogether—or maybe you’re one of them. Many hesitate because they think implementing a PO system will take too much time or add unnecessary complexity. But the truth is, with today’s digital tools, managing POs is easier than ever.

Instead of wrestling with spreadsheets and paperwork, platforms like Adaptive streamline the whole process, allowing you to focus on the build, not the admin.

“I know you don't want this podcast to be a sales pitch, but it has saved us an immense amount of time. It saved our clients peace of mind. In general, it's so easy to do draws, the budget management piece is phenomenal for us. POs are obviously a huge part of that. Now, I don’t have to spend a million hours a week trying to track down costs or figure out what I was supposed to pay a guy. It’s all in one place—so easy.” -Tyler Brabec, Founder of Brabec Custom Homes

Integrating POs into your processes will save you time, money, and stress in the long run. With POs, builders are able to stay organized and improve their relationships with both clients and subcontractors.

Ready to streamline your next project? Start using Purchase Orders today, and watch how they transform your business.