There are several different types of requisition forms, but in the construction industry there are only two that are commonly used. One is a construction equipment order and the other is a construction order. Most of the time, construction companies use construction orders, as they seek to receive payments at different times for the projects they are working on.
After all, a construction requisition is an invoice that can be issued to a contractor, subcontractor, client or anyone else, on a one-time, weekly, fortnightly or even monthly basis. However, most of the time, the requests sent are recurring invoices that consist of scheduled amounts and completed items.
Most requisitions will include the value of the line item that was included in the contract, as well as the work that has been completed to date and previous billing for that same line item. The last part will include the currently required billing, which is the main reason for the current request.
In the dynamics of civil construction, the purchase requisition is a fundamental procedure for acquiring materials and supplies necessary for projects. Understanding its process and importance is essential to ensure the efficient flow of resources and materials.
What is a Purchase Requisition?
A construction purchase requisition is a formal document that authorizes a company's purchasing department to purchase specific materials or services from approved suppliers. It is generally generated by a responsible department or employee who identifies the need for a specific product or service.
Components of a Purchase Requisition
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Product or Service Details : The request must include a clear and precise description of the product or service required, including technical specifications, quantity required and, if applicable, references to catalogs or standards.
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Justification and Purpose : It is important to provide an explanation for the need for the product or service, highlighting how it will contribute to the progress of the project or the execution of planned activities.
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Date and Signature : The request must be dated and signed by the authorized person, thus guaranteeing its authenticity and validity.
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Budget and Approval : When applicable, the requisition must include information about the budget available for the purchase and the approval procedures required before issuing the order.
Approval and Execution Process
After preparing the purchase requisition, it goes through an internal approval process, where the relevant parties review and authorize the request. Once approved, the requisition is forwarded to the purchasing department, which uses it as a basis for issuing the purchase order to selected suppliers.
Importance of the Purchase Requisition
Proper use of the purchase requisition is crucial to ensuring the efficient and cost-effective acquisition of materials and services needed for construction projects. Furthermore, it contributes to cost control, transparency in operations and compliance with policies and procedures established by the company.
In a sector as dynamic and complex as civil construction, effective management of resources and materials is essential for the success of projects. The purchase requisition plays a fundamental role in this process, providing an organized and transparent structure for the acquisition of materials and services, thus ensuring operational efficiency and achievement of project objectives.
Of course, many responses are required before a requisition can be filled, much less sent a payment request. These answers are required for the following five questions:
- By when does the person need or want to receive the request? – There is no point sending it by mail at the beginning of the month if the person doesn't want it by the fifteenth, as it will get lost among all the paperwork and may need to be sent again.
- What format is being requested? – This is where the construction company will need to make sure they are sending the correct request form, as anyone requesting the use of their personnel will not respond to one sent on a different form. This will mean that the construction company will need to do twice as much work, as the personal request form will eventually have to be completed and sent, although a different version already exists.
- Was the table of values accepted? – If the values were not accepted, the request form may be missing vital information.
- Who is the invoice being sent to? – The easiest way to receive a quick payment is to make sure the appropriate person is receiving the request. Sending the request to the wrong person could mean that it is more likely to be lost when it reaches the person it belongs to.
- What are the payment terms? – Submitting a requisition with terms that indicate payment in full upon receipt will not work very well if the terms are paid in full within thirty days of receipt as agreed. Whoever is doing the invoicing will need to make sure they have the most recent contractual agreements to hand so they can invoice appropriately. After all, changes can occur at any time during a project, and what was applied at the beginning may be different at the end.
A construction requisition is a necessary document as it serves as the legal form that a contractor, subcontractor or other clients must comply with. This form holds everyone accountable and ensures that each person fulfills their part of the current agreement.
In the construction industry, adopting requisition forms is more than just a best practice – it is a fundamental strategy for ensuring the operational efficiency and financial health of companies. Avoiding the use of these forms can result in lost payments and a lack of organization in payment processes.
Why Use Requisitions in Construction?
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Payment Tracking : Requisitions provide a structured system for tracking and managing payments related to materials and services. Without them, construction companies risk losing control over payments due to a lack of adequate documentation.
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Financial Efficiency : By implementing requisition requirements, construction companies can significantly improve their financial efficiency. This translates into receiving payments in a timely and accurate manner, thus reducing the need to spend hours on tracking and billing tasks.
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Organization and Accessibility : Keeping all requests organized is essential to facilitate location and retrieval when necessary. Whether through paper copies organized chronologically or through specialized software, organizing requests ensures that documentation is always accessible.
Organization Options
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Paper Copies : Some companies choose to keep physical records of requests, archiving them by date and customer. While this can be effective, it can be labor-intensive and susceptible to human error.
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Requisition Software : Using specialized requisition software is a more modern and efficient option. These tools allow the creation, storage and rapid retrieval of requests, thus simplifying the entire process.
Concluding
Investing in construction requisition systems is a smart decision for companies in the sector. By adopting this practice, construction companies can optimize their financial processes, ensure effective tracking of payments and maintain a solid organization in all business transactions. Ultimately, this contributes to the company's profitability and operational efficiency.
