Procurement & finance
Purchase Order (PO)
The instrument that commits cost. An approved PO is a legally binding offer to buy, and the moment it is issued the money is committed — before any delivery, and long before any invoice arrives.
Which is why a project that tracks only actuals learns about its overruns thirty to sixty days late. The liability existed when the PO was approved; the invoice merely reports it, and by then every option that might have been taken has expired.
And a PO is not a contract for everything. It buys a thing at a price. It cannot carry supervision obligations, insurances, liabilities or intellectual property — those belong in a contract, and a services engagement run on a two-line PO has no answer to the question of what happens when it goes wrong.