Committed Cost
The total financial obligation on a construction project including contracts, purchase orders, and change orders.
Definition
Committed costs represent the total financial obligations for a construction project, including executed subcontracts, purchase orders, and approved change orders. They indicate the amount the project is obligated to spend regardless of whether invoices have been received or payments made.
Why It Matters
Committed costs give the earliest view of project cost trajectory. Comparing committed costs to budget reveals overruns before invoices arrive, allowing corrective action before it is too late.
Examples
Budget comparison
Concrete budget is $200,000. Subcontract committed at $180,000 plus $15,000 in change orders. Committed cost = $195,000, leaving only $5,000 contingency.
Cost to complete
Total committed cost of $1.2M against a $1.5M budget shows $300,000 remaining for uncommitted work.
How Nexus AP Helps
Nexus AP tracks committed costs against budgets by integrating PO and subcontract data, providing real-time visibility into project financial health.
Start Free TrialFrequently Asked Questions
What is included in committed costs?
Subcontracts, purchase orders, approved change orders, and any other binding financial obligations for the project.
How do committed costs differ from actual costs?
Committed costs are what you are obligated to pay. Actual costs are what you have already paid or been invoiced for. Committed is always >= actual.
Category
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