Active vs. Passive Control
- Passive Control: Reviewing invoices when they arrive and checking if they match the order.
- Active Control: Managing the commitment before it happens.
The Purchase Order (PO) System
A PO system is the primary tool of cost control. It ensures:
- Price is agreed before supply.
- Scope is defined (no "extra cartage" surprises).
- Budget code is assigned (so you know which bucket the money is coming from).
Rule of Thumb: No PO, No Pay. If a supplier sends an invoice without a PO number, it is rejected.
Cost Control Is a System (Not a Spreadsheet)
- Scope control: changes must be written and cost-coded (site instructions and variations are cost documents).
- Approval workflow: define who can authorise spend and at what thresholds.
- Commitment visibility: if it’s not committed, it’s invisible until the invoice arrives.
- Variance discipline: every variance gets a reason and an action, not just a number.
Common Variance Triggers
- Substitution drift: “small upgrades” that were never formally varied.
- Rework: defects and damage (often a process failure, not a trade failure).
- Productivity loss: stacking trades, poor access, late information.
- Freight and handling: double-handling due to poor laydown planning.
Builder’s Weekly Review (15 Minutes)
- Top 5 cost codes by forecast overspend.
- Top 5 pending variations / claims not yet approved.
- Procurement risks (lead times, deposits, supplier performance).
- Actions with owners and dates.