What happens when work starts without a purchase order?

The price was never agreed, so it is the supplier’s price

This is the part people underestimate. Without a purchase order, nobody wrote down what the thing was going to cost before it was supplied. The negotiation now happens after delivery, after installation, and after your leverage has gone home.

You may well have a framework rate that should have applied. It did not apply, because nobody raised the call-off. That saving is simply forfeited.

The liability existed and nobody could see it

The commitment never entered committed cost, so between the verbal order and the invoice the project reported a financial position that was untrue. Not wrong by a little — untrue in a specific direction, and always the flattering one.

Margin surprises at project close are very rarely a surprise. They are the accumulated weight of commitments nobody recorded, arriving all at once.

And it is not a discipline problem

It is tempting to treat this as a compliance failure and write a stern procedure. That does not work, and it has never worked.

The site engineer who phoned the supplier was solving a real problem under real time pressure. If raising a proper PO takes longer than that phone call plus a favour, the phone call is the rational choice, and they made it. Fix the speed, and the behaviour fixes itself. An emergency PO issued in ten minutes beats a verbal order — a two-day approval chain does not.

Terms

• Purchase Order (PO)