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Variance purchase orders capture changes in budgeted job costs as they happen, allowing you to manage those changes while there is still time to protect your profit margin. The VPO form shown here is available for download in the Business Technology forum at jlconline.com.
This month I want to talk about one of the most important aspects of a purchasing system: the ability to accurately capture, manage, and minimize unwanted job-cost variances. We'll also discuss a related topic - using your purchasing system to better manage change orders and allowances.
A "variance" is anything that varies from what you had originally planned. A time variance occurs when a task takes longer or shorter than you had scheduled, and a cost variance happens when something costs more than you had estimated in your project budget. Since we've been talking about direct job costs, we'll tackle cost variances in this...
