Budget vs committed vs actual — what is the difference?
Three lines, and you need all three. Budget is what you planned to spend. Committed is what you have legally promised — approved purchase orders and subcontracts — but not yet been invoiced for. Actual is what has been invoiced or paid. Forecast final cost is actuals, plus open commitments, plus an estimate of the balance still uncommitted.
Why tracking only actuals fails
It fails structurally, not through carelessness. Invoices arrive 30 to 60 days after the commitment was made. So a cost report built only on actuals is telling you, with great precision, what your position was two months ago.
By then the money is owed, the material is ordered, the subcontractor is mobilised, and every option you might have taken has expired. You are not managing cost. You are reading its obituary.
Committed cost is the number that lets you act
The moment a purchase order is approved, the money is promised. That is the point at which a decision is still available — to change the quantity, to challenge the rate, to not place the order at all.
Which is why committed cost has to post on approval rather than on invoice. A commitment that is not in the cost report is an invisible liability, and it is invisible precisely during the window when it could still have been changed.
The two failure modes, and they are symmetrical
Under-recording: verbal orders, uncaptured revisions, commitments that never made it into the report. The project reads as on budget until the invoices land, and then the forecast’s credibility goes with them.
Over-recording: stale purchase orders left open with undelivered residual balances, holding phantom commitment against a budget that is actually available. The team manufactures a budget crisis and runs a real value-engineering exercise against a number that was never true.
Both come from the same root, and it is not arithmetic. It is that nobody closed the loop.
In the guides
Terms
References
- module: /modules/purchase-orders/ — the commitment model; KPMG Global Construction Survey
Zepth is the construction project delivery platform — it runs construction, procurement and asset management on one record, and does the work: reading the drawings, reviewing the submittals, matching the invoices and flagging the risks, with a human sign-off on anything consequential.
Related questions
See Zepth on your project.
A short, tailored walkthrough on your real workflow — no generic demo.
Book a meeting