Budget vscommitted
Budget minus committed is your buffer.
Every line of a construction budget has a commitment against it: the POs, subcontracts, and change orders you have signed. The gap between the two is your buy-out buffer, and it is what protects contingency before you ever touch it.
What committed cost actually is
Committed cost is what you are contractually on the hook to pay for a scope, whether or not the work has happened yet. On each budget line it is the sum of three things, and budget minus that sum is your buy-out position on the line.
Early releases and purchase orders that lock in price before a full contract.
The executed subcontract or supply agreement value for the scope.
Executed additions and deductions to that commitment.
Delta = Budget − Committed
A positive delta is buy-out savings: you locked in the scope for less than you budgeted. A negative delta is an overrun: the commitment came in above the line. Read one line alone and it looks like a problem or a win. Read the whole category and the picture changes, because one line’s savings can cover another line’s overrun before any reserve is touched.
The category, line by line
One category, four packages. Two came in under budget, two over. The category is viewed as a whole. Figures are illustrative, in millions.
| Package | Budget | Committed | Delta |
|---|---|---|---|
| Steel package | $12.0M | $10.2M | +1.8M saving |
| Envelope package | $8.5M | $7.8M | +0.7M saving |
| Mechanical package | $6.0M | $6.9M | -0.9M over |
| Sitework package | $4.5M | $5.0M | -0.5M over |
| Category | $31.0M | $29.9M | +1.1M buffer |
The buffer, at a glance
The whole category budget against everything committed to date. The green band is the net buy-out buffer, the savings sitting between what you budgeted and what you have actually signed for. That band is what covers an overrun before contingency is touched.
The draw order that keeps contingency intact
When a line overruns, a disciplined cost model absorbs it in a fixed order, and contingency and margin sit last for a reason.
Any remaining budget on the overrunning line covers its own overage first.
Savings on the other lines in the same category absorb the rest. This is the buffer above.
Only a net-negative category reaches here, and crossing into it should be a flagged, acknowledged event.
The last resort. If an overrun reaches margin, the job is giving back profit.
Committed is what you have signed for; actual cost is what has been performed and billed. Both matter. The view below tracks budget against actual cost by category, the companion to the committed-vs-budget buffer above, so you can see where the money is going as well as where it is locked in.
Cost Breakdown
Four ways it goes wrong
A commitment is not a cost incurred. Committed is what you are on the hook to pay; actual cost is what has been performed and billed. Confusing the two makes both the burn and the buffer wrong.
A single line overrun is first covered by other lines’ buy-out savings in the same category. Draw on contingency only when the whole category is net negative, or you spend a reserve you did not need to.
Moving budget between lines within a category is a transfer that never changes the category total or the cost baseline. Treat it as a change to the baseline and the variance history stops meaning anything.
Only executed change orders raise a commitment. Fold in approved-but-unexecuted ones and the committed figure runs ahead of what has actually been signed.
A stored spreadsheet vs a current read
The buffer is only useful if it is current. The difference between a stale cost report and a live one is entirely about how the commitments get in.
- ·The budget lives in a spreadsheet, the POs in the accounting system, the subcontracts in a folder
- ·Someone reconciles committed against budget by hand, once a month at best
- ·A category overrun surfaces after the buffer is already spent and contingency is drawn
- ·Nobody sees the buy-out savings that could have covered it two lines over
- ·POD reads each PO, subcontract, and executed change order as it is signed
- ·It carries committed against budget per line and per category, current every day
- ·The net category delta, your buy-out buffer, is visible before an overrun lands
- ·Crossing the buffer into contingency is a flagged event, not a month-end surprise
POD reads your purchase orders, subcontracts, and executed change orders as they arrive and keeps committed against budget current, per line and per category. It pairs with the WIP schedule, earned value management, and cost management. Read them together, never one alone.
The project controls library
The pillar guide: how cost, schedule, commitments, and earned value come together in one controls picture.
Billed against earned by cost percent complete, and the over- or under-billed position.
Where commitments and actuals meet the budget, and how software keeps the running cost position honest.
How CPI and SPI are derived, and what a system of intelligence needs to compute them.
The patterns behind blown budgets, and the early signals software should catch.
The free budget-vs-committed tracker that feeds the buffer math when POD reads it.
Budget vs committed questions
What is the difference between budget and committed cost?▾
Budget is what you planned to spend on a scope. Committed cost is what you are contractually on the hook to pay for it, the sum of purchase orders, subcontracts, and executed change orders. Budget minus committed is your buy-out position on that line: positive is a saving, negative is an overrun.
What is a buy-out buffer?▾
When a category is bought out, some lines come in under budget and some over. The net of those variances across the whole category is the buy-out buffer, a pool of savings that covers overruns on other lines in the same category before you ever touch project contingency.
What is included in committed cost?▾
Committed cost is the sum of early releases and purchase orders, the executed contract value for the scope, and any executed change orders to that commitment. Approved-but-unexecuted change orders are not committed until they are signed.
How does the buy-out buffer protect contingency?▾
The draw order for an absorbed overrun runs from the line’s own budget, to the category buy-out buffer, to project contingency, and only then to margin. Because the buffer sits ahead of contingency, buy-out savings absorb overruns first and contingency stays intact for genuine risk.
Is committed cost the same as actual cost?▾
No. Committed is what you have obligated yourself to pay; actual cost is what has been performed, incurred, and billed to date. A subcontract can be fully committed while very little of its work, and cost, has actually happened yet.
How does POD help track budget vs committed?▾
POD reads your purchase orders, subcontracts, and executed change orders as they arrive and keeps committed against budget current, per line and per category, so the buy-out buffer is visible in real time rather than reconciled by hand once a month.
POD keeps budget and committed current
Begin with the free budget tracker, then let POD read the POs, subcontracts, and change orders already flowing through your jobs. Per line, per category, in real time.