The three numbers on a live job
- Budgeted cost. What you estimated for each category when you priced the work. Your baseline.
- Committed cost. Money you've legally or practically obligated: signed subcontracts, issued purchase orders, approved change orders. You may not have paid a dollar yet, but it's spoken for.
- Actual cost. Money that has actually left the business: paid invoices, processed payroll, cleared receipts.
The relationship is simple: costs usually become committed before they become actual. You sign a sub's contract today (committed); you pay them in draws over the next two months (actual).
Why committed cost is the early-warning system
Here's the trap. If you only track actual spending, your budget looks healthy right up until the invoices land. Imagine you budgeted $40,000 for framing. You sign a framer at $46,000. Your actual spend is still $0 and the budget looks fine, but you're already $6,000 over. That overrun exists the moment you commit, not the moment you pay.
Committed cost surfaces the problem while you can still act: renegotiate, adjust scope elsewhere, or issue a change order. Miss it and you discover the overrun at close-out, when nothing can be done.
The formula that keeps you honest
For any category or the whole job:
Projected final cost = Actual cost + Remaining committed cost + Estimated cost to complete (uncommitted work)
Then compare projected final cost to budget:
- Under budget. You have room.
- On budget. Hold the line.
- Over budget. Act now, not at close-out.
That third term, cost to complete for work you haven't committed yet, is what turns this from a rear-view mirror into a forecast.
A simple example
Kitchen remodel, cabinets budgeted at $18,000:
- You issue a PO for $17,200. Committed $17,200, actual $0.
- Deposit paid, $8,600. Actual $8,600, still committed $17,200 total.
- Cabinets delivered, balance paid. Actual $17,200.
At every stage your committed number told you the true exposure ($17,200, under budget) long before the actuals caught up. If that PO had come in at $19,000, you'd have known you were over on day one.
Putting it into practice
- Log commitments the moment they're made, the day you sign a sub or issue a PO, not when you pay.
- Track by category and phase, not just job total, so you know where the movement is.
- Update your cost-to-complete on uncommitted work regularly.
- Review weekly. Five minutes catches a lot.
This is job costing done in real time. Pair it with realistic unit costs from the Construction Price Index when you're forecasting the uncommitted portion.
Where this fits
Committed vs. actual is the operational core of the budgeting and job costing cluster and the bridge to earned value tracking. You can't measure whether you're ahead or behind without a live view of cost. It's fundamental construction project management.
Put it to work
The free estimating tool gives you the budget baseline. TradesMetrics then tracks committed and actual against it automatically, so overruns light up while you can still act. See how it works.