James Kazman

Art Stinson, owner of Trace Ventures, in Nashville, Tenn., is passionate about purchase orders. “Before we had this system,” he says, “we were wandering in the dark.”

Ten years ago, as Trace Ventures moved from cost-plus to fixed-price, the company began to systematize. “We needed a way to give people a price, know where we’re headed, and know what the bottom line is going to be,” Stinson says.

Once a contract is signed, vendors, trade contractors, and the materials involved in a particular project are assigned a purchase order number. “We review the number against budget, and if there’s a discrepancy, we figure out why,” says operations manager Gianni Shipman, who prepares the estimates.

Trace Ventures has an eight-step process based on 28 category codes for creating and using purchase orders, which includes information on how to generate a number, what to do if a quote is not in line with an estimate, and how the PO system feeds the job-cost summary report. The same system of 28 categories follows through the entire process, including change orders, original work items, and scope of work. “Without POs, it’s just hen scratching on paper,” Stinson says.

—Stacey Freed, senior editor, REMODELING.