Lecture 7 - Purchase Orders Flashcards
a sale of materials for the contractor to use at the project site.
purchase order
When can a purchase order be issued?
any time after the contractor is awarded the contract, which is before the actual contract is signed.
is defined as a contractor under the prime contractor who does a portion of the work ______
Subcontractor, onsite
usually involves offsite work, with the finished product being delivered to the site and incorporated into the project
Fabrication
If the fabricator merely constructs the fabrication offsite and a different contractor installs it, then the fabricator is a
material supplier
If the fabricator installs the fabrication onsite, then it would be a
subcontractor
if significant amounts of onsite labor are required, use a ________. Otherwise, use a ______
subcontract, purchase order
T/F A purchase order for continuing supplies may be open ended and should have an approximate quantity or maximum quantity in the purchase order.
True
a _____ will depend on the quantity estimated and may be subject to adjustment if the amount actually ordered differs
quote
should have an approximate quantity or maximum quantity
purchase order for continuing supplies
T/F You should use “boilerplate language” (A contractor’s purchase order form should specifically state the purchase order provisions control no matter what the quotation provisions are)
True
T/F A copy of the contractor’s contract should be provided with the purchase order to the material supplier, with language that the contract is incorporated by reference
True
Necessary identification information: The purchase order should have
(1) a description of the project,
(2) the owner,
(3) the designer,
(4) the owner’s field representative,
(5) the contractor, and
(6) the material supplier.
Description of goods being purchased: The purchase order should contain either
(1) a complete description or
2) reference to the contract section that adequately describes the materials (flow-down language
Shipping instructions: The purchase order should identify the
(1) receiving party and address (if a receiving area different the front gate for the project is used, it needs to be identified),
(2) how the materials are to be marked and packaged (very important for prefabricated materials).
Pricing and basis for quantity measurement: The purchase order should differentiate between
lump-sum materials versus unit price materials.
The materials need to be purchased on the same basis, unit-by-unit, as provided in the contract (flow-down language).
2/10 net 30
This means that if the contractor pays within ten days of delivery, the price will be discounted by two percent, but that in any event the full amount is due in 30 days.
T/F Provided that the contractor can afford it (paying the supplier before being paid by the owner), it should always pay early and get the discount.
True
then the payment received from the owner is a condition precedent that must be met or the contractor never owes the supplier.
“Conditions Precedent”
T/F If the project site has plenty of room to store the materials, the contractor may decide to receive delivery of the materials far in advance of when they may be needed.
True
T/F The completion of the purchase order contract is delivery of the materials to the contractor.
True
“FOB” stands for_______ and is used to determine the delivery location.
free on board
means that the material supplier delivers the materials to the site, at which time the contract is completed and payment is due in accordance with the purchase order contract.
The material supplier is responsible for loading the materials onto a truck, properly marked and packaged, and delivering them to the construction site, where they are off-loaded by the contractor.
As they are off-loaded the contractor should be examining the materials as to quality and quantity. Any defective materials should be re-loaded and returned to the supplier.
“FOB construction site”
means that the contractor provides for the transportation of the materials. At the supply house, the contractor inspects the materials as to quality and quantity and loads its own truck, or a third-party hauler, and delivery and off-loading at the construction site (or wherever the materials are to be stored until needed).
The sale of the materials is completed at the supply house.
“FOB supply house”
