Committed cost
A committed cost is money you're obligated to spend but haven't been billed for yet — typically an open purchase order or signed subcontract.
Tracking committed costs (not just costs already invoiced) gives a truer forecast of a job's final cost, because it reflects obligations already made. Without it, a job can look under budget right up until the subs' invoices land.
Related terms
- Purchase order (PO) — A purchase order is a document committing to buy materials or subcontracted work at agreed quantities and prices, tied to a job.
- Job costing — Job costing is tracking the actual costs of a specific job — materials, labor, subs, and other expenses — against what you estimated, so you know the real profit on that job.
- Estimate vs. actual — Estimate vs. actual compares what you bid for each part of a job to what it actually cost, revealing where your estimating was off.