How to Link a Change Order to a Purchase Order Revision

In this article I’m going to go through the basics of how, after creating a change order in 4castplus, you can go on to make any revisions to purchase orders based on the details of that change order. First, however, I’ll clarify a bit of terminology in terms of the difference between a change order and PO revision:

• Change Order. A change order is a formal modification to the project budget after that budget has been baselined. Sometimes called a “Variation” order, change orders are used to represent a scope change in the overall project. You can create a change order and go on to build up an estimate for that change order using detailed estimating principles. Change orders start in a “Pending” state until approved, after which they move into an Approved state, and the budget for the approved change order is now considered part of the project’s Current Budget – as compared to the original “Baseline” Budget.
• Purchase Order Revision. PO Revisions are a bit like a change order but they don’t affect the whole project budget – they are instead contained to a specific purchase order. The procurement team can elect to Revise a purchase order, which opens all the fields and contract information to be editable. New pay items can be added, and the unit price and/or total quantity of existing items can be modified. Each purchase order can be revised an unlimited number of times, and the system keeps track of the full revision history.

A Change Order, therefore, modifies the whole project budget based on any change in project scope. A PO Revision by comparison, just changes a specific purchase order.  It’s not uncommon to see a change order precede a PO revision since they can be tightly connected.

Let’s say, for example, your customer has requested that you extend the pump capacity of a facility you’re building, which will result in a $250,000 change order to cover the extension. The breakdown of the change order will be a combination of extra materials, labor and equipment to do the work.  Some of the change order might be budgeted to cover your own internal labor hours of your self-performed work, but part of the change order will include an increase in, for example, the number of steel beams for the building’s extended structure.  Since you already have a PO in place with a steel supplier, it likely makes most sense to just add the extra beams to that existing purchase order, and re-issue it to the supplier.  This is where the link between a change order and a purchase order revision comes in.

First, I’ll create a change order and budget some additional steel items. That change order was given the number: PCC-CO00023.