Committed cost

Also called commitment, open commitment

Definition

A cost you've agreed to pay but haven't been invoiced for: a signed subcontract, a placed order, an accepted quote. It belongs in the job's forecast from that day.

The moment you sign the framing sub for $18,500, the job has an $18,500 cost. No invoice exists, nothing has been paid, and most bookkeeping shows nothing. That gap between agreeing to a cost and recording it is why jobs look profitable in week three and thin in week twelve. A committed cost is the agreed amount, entered on the job when it's agreed, and reduced as the invoices against it arrive.

A worked number

Contract $68,000. Recorded costs so far $22,000. Commitments not yet invoiced: cabinets $10,500, electrician's balance $3,200, tile sub $4,200. Actuals-only margin: $46,000, which looks wonderful. Margin with commitments: $28,100. The second number is the one you can plan around.

The mistake it hides

Deciding anything from the actuals-only view: taking a discount, quoting the next job, paying yourself. Accounting software is not wrong to leave commitments out; accounting records what happened. Job costing needs what's coming, which is why the committed costs guide argues for a second table.

In Obra

Obra keeps no purchase-order ledger. When you sign a sub or place an order, you put the amount into the project's forecast review as remaining to spend, and the expected final cost, recorded cost plus that figure and never below what's recorded, counts it from that day. When the invoice arrives and is confirmed, the cost moves from remaining to recorded, and Obra flags the forecast for review if the numbers move past it.

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