Actual cost records work or resources already recognised under your costing policy. Open commitments cover obligations that have not yet moved into that recognised cost. Read them together with the forecast of remaining work, using categories that do not count the same purchase twice.
Ask a project manager whether a job is on budget and you will usually get an answer drawn from invoices — what has been billed to date against what was estimated. It is the most available number and the least useful one, because it describes the past. The decisions that save a job are made against what has already been promised but not yet billed.
The two numbers
Actual cost and open commitment answer different questions. Their definitions must be agreed before you add them together.
| Actual cost | Open commitment | |
|---|---|---|
| Meaning | Cost already recognised for the work or resources used | An outstanding obligation not yet included in recognised cost |
| Evidence | Recorded consumption, completed work, receipts or bills, according to the costing policy | Approved orders or contracts and their remaining scope |
| Question | What cost has been recognised so far? | What cost have we already agreed to take on? |
| Review | Check the recognition event and cut-off date | Check receipts, cancellations and changes that reduce the outstanding balance |
Adding actual and committed cost is useful only when they cover distinct amounts. An invoice, receipt and stock issue can describe different stages of the same purchase. They are not three separate costs to add to a forecast.
A receipt can create inventory or WIP before an invoice arrives. That does not make every receipt a production expense. Distinguish acquired material, material held for the job, and material consumed in the work.
Where commitment happens
An approved purchase or contract can create an obligation before a bill exists. As the work progresses, the outstanding commitment should be reviewed against deliveries, accepted work and agreed changes.
Which step changes the project-cost category depends on the workflow and costing policy. Inventory received for a project may remain in stock or WIP before it becomes production actual. Payment settles an obligation; it does not mean the same cost should enter the project forecast again.
Planned labour also needs a clear classification. A scheduled crew is not automatically a contractual commitment. Include work that remains to be done in the forecast, and distinguish an agreed subcontract from an estimate of future internal hours.
A worked example
A simplified $180,000 fit-out job, six weeks in, estimated at $132,000 of cost. In this example the actual and committed columns are mutually exclusive; the labour commitments represent contracted work, not merely scheduled internal hours.
| Cost category | Estimated | Actual | Committed | Exposure |
|---|---|---|---|---|
| Sheet material and hardware | $41,000 | $38,600 | $6,400 | $45,000 |
| Fabricated metalwork (subcontract) | $28,000 | $0 | $31,500 | $31,500 |
| Finishing | $12,000 | $4,100 | $8,200 | $12,300 |
| Shop labour | $34,000 | $19,800 | $13,600 | $33,400 |
| Install labour | $17,000 | $0 | $17,000 | $17,000 |
| Total | $132,000 | $62,500 | $76,700 | $139,200 |
Read on actuals, the job has spent 47% of its budget. Read on total exposure, it is already $7,200 over.
Two things are visible here that no invoice-based report would show. The metalwork subcontract came in $3,500 above estimate — that decision was made weeks ago and is unrecoverable. Material is tracking $4,000 over, with $6,400 still outstanding on agreed orders. That amount is already committed; reducing it would require an agreed change or cancellation, not simply a decision to avoid placing an order.
The margin conversation this table produces is completely different from the one the actuals produce. Actuals say "we are fine, keep going." Exposure says "the metalwork is gone, protect the remaining material spend and get the install scope confirmed before anyone books a crew."
Estimate at completion
Committed plus actual still is not the full forecast, because some work has neither been done nor ordered. Estimate at completion closes that gap:
EAC = recognised cost and resources already held for the job + open commitments + remaining uncommitted forecast
Compared against contract value, EAC is the earliest defensible read on final margin. Tracked week over week, its direction matters more than its value — a job whose EAC has risen three weeks running has a problem that has not been named yet.
The third term is the honest one. It requires someone to look at what is left and say what they think it will take, rather than assuming the remaining budget is the remaining cost. Most job cost systems quietly assume the latter, which is why so many jobs appear fine until the week they do not.
How this goes wrong
- Commitments recorded late. Material ordered by phone or email and entered as a purchase order only when the invoice arrives. The commitment never existed as data, so it never appeared in a forecast.
- Change orders committed before they are approved. Work starts on a verbal instruction, cost accumulates against the job, and the contract value does not move to match. This is the most reliable way to turn a profitable job into a loss.
- Commitments never relieved. Purchase orders that were fully received but stayed open, or lines closed short that nobody cancelled. Phantom commitments inflate exposure and make the report untrustworthy, which is worse than not having it.
- Labour treated as free until posted. Remaining labour omitted from the forecast, so a job looks healthy until the timesheets arrive. Classify it as committed or uncommitted according to the agreement, and replace the forecast as actual work is recorded.
- Overhead applied at the wrong moment. Burden applied at invoice rather than as hours are incurred, making early-stage jobs look artificially cheap.
The pattern behind all five is the same: commitment data is operational, and it decays fast. It only stays accurate if it is a by-product of how work is actually done, rather than something a person maintains on the side.
How Datum handles it
Datum's project-cost view separates open commitments, project-allocated inventory, project WIP, production actual and uncommitted forecast. These categories contribute to forecast at completion. Original and current budgets are comparison measures.
Procurement actual is shown as a supporting measure and is not added to that forecast again. This distinction matters when a purchase is already represented by material held for the project or by production cost. The project-cost flow guide explains the categories with an example.
The project-cost view and the general ledger serve different purposes. Your business can use Datum Accounting or supported external books; the accounting route does not change the need to distinguish obligations, held resources and completed work.
What to check in your setup
- Agree which event reduces a commitment and which event records production cost.
- Review the same cut-off date and currency basis across orders, inventory and the project forecast.
- Confirm which project workflows are included in your edition and how remaining work is maintained.
Related questions
Is committed cost the same as an accrual?
No. A commitment describes an outstanding operational obligation. An accrual recognises an amount under an accounting policy. They can relate to the same purchase at different stages, so their recognition events and reporting scope must be kept distinct.
When does a committed cost become an actual cost?
When the relevant obligation is fulfilled and the cost moves into the category defined by your costing policy. A receipt may first create inventory or WIP; an invoice is not the only possible recognition event. Reconcile the outstanding commitment rather than counting both the original order and its fulfilled portion.
What is estimate at completion?
Estimate at completion is the forecast total cost of the job. It combines recognised cost, resources already held for the work, outstanding commitments and remaining uncommitted work without overlap. Compare it with the budget and contract value using the same scope and currency basis.
Why do spreadsheets struggle with committed cost?
Because commitments change constantly and live in a different place from the invoices. Every new purchase order, change order and cancelled line has to be found and re-keyed. The spreadsheet is accurate on the day it is built and drifts from that point on.