Work order or purchase order: which one you are issuing

A purchase order buys goods. A work order buys work.

Stated like that it sounds too obvious to write down, and yet the two documents are routinely used interchangeably, produced from the same template, and approved by the same person on the same screen. They carry different risk, need different measurement, and pay out on different events.

What changes when you buy work rather than goods#

Completion is a judgement. A purchase order is satisfied by delivery, which is an observable event with a lorry attached. A work order is satisfied by work being done to a standard, and somebody has to decide whether it has been.

Quantity is measured after the fact. With goods, the quantity is what was ordered and what arrived. With work, the quantity is what was executed, and it is determined by measurement on site against the rates in the order — which is why work is paid on running account bills and goods are usually paid on invoice.

Defects appear later. Faulty material shows up on arrival or shortly after. Faulty work shows up in the monsoon. Hence defect liability periods and retention, neither of which has an equivalent in a straightforward purchase.

People are on your site. Which brings safety obligations, access control, insurance, and a set of statutory responsibilities that buying a lorry of sand does not.

The tax treatment differs, in ways that depend on the nature of the supply. This is your accountant's question, not a template's, but it is one more reason the two documents should not be produced by the same form with a different title.

The hybrid, which is most of them#

Very few orders in construction are pure. "Supply and fix", "provide and lay", "supply, install and commission" — these are a supply and a service in one line, and the split between them is not stated anywhere.

That unstated split is where several separate problems originate:

• Measurement. Is the item paid on delivery of material, on completion of installation, or partly on each?
• Risk of loss. Who owns the material sitting on site before it is fixed?
• Retention. Does it apply to the whole value or only the labour portion?
• Tax. The treatment may differ across the components.
• Defect liability. Material defects and workmanship defects may be different parties' problem.

None of these has a universal answer. All of them have an answer for your contract, and that answer should be written on the order rather than established by argument at the first dispute.

The line item is the contract#

Whichever document it is, its power sits in the description of each line, and descriptions are written badly with remarkable consistency.

A good line names: what is included, what is excluded, the unit, the rate, and what event makes it payable. That last one is the field almost nobody has, and it is the one that determines when money moves. The other clauses worth reading before anybody signs are set out in what a work order should say.

The habit of reading a description for what it excludes rather than what it includes is the same discipline that makes somebody good at reading a bill of quantities, and it is worth training deliberately.

Approval is about consequence, not amount#

Most organisations route approval by value: below a figure one person signs, above it two.

Value is a poor proxy on its own. A small work order that puts people on a live site, or that touches a structural element, or that commits you to a defect liability for years, carries more consequence than a large order for a commodity material at a rate already agreed.

A better shape is to route on the properties that actually create exposure: whether it is work or supply, whether it involves people on site, whether it creates an ongoing liability, whether the rate is pre-agreed or new. Value remains one input among several.

What should never vary is the floor. Money leaving the company needs two different people, regardless of amount, for reasons set out in why one person should never move the company's money.

Amendments, and the version that was actually acted on#

Orders change. Scope is added, rates are revised, quantities move.

The failure is not amendment. It is amendment by conversation. A revised rate agreed on a phone call, confirmed by a message, and never reflected in the order produces a document that no longer describes the agreement, and every downstream check against it fails correctly and inexplicably.

Two requirements. An amendment is a new version with a number and a date, not an edit to the original — because the original may already have been acted on and somebody may need to know what it said at the time. And the version that was current when each delivery or measurement happened must be identifiable afterwards.

This is the same principle that makes a signed document worth signing. The value of a record is that it says what it said; a record which can be revised in place is worth exactly as much as the memory of the last person to open it. We have written about the mechanics of that in tamper-evident documents.

The document that gets acted on is the one on the site#

A last practical point that no template solves.

The version of the order that governs behaviour is whichever version the person doing the work is holding. If that is a printout from three weeks ago, then three weeks ago is your contract, whatever the file server says.

The only real remedy is that the current version has to be easier to reach than the old one. Not a policy about superseded copies. A link that is genuinely faster to open than a piece of paper is to find, on a phone, on site, on a bad connection.

The short version#

A purchase order buys a thing and is satisfied by delivery. A work order buys an outcome and is satisfied by judgement, measurement, and eventually by the absence of defects.

Most real orders are both, and the split between the two halves should be written down rather than assumed.

Route approval on consequence rather than on amount alone, amend by versioning rather than by editing, and make the current version the easiest one to find.