Commitments vs actual costs: why the budget seems in line and is not
There is a precise moment when a project budget is ruined: when the order is placed. From that moment the money is tied up, but it doesn't appear anywhere in the reports — because the report only looks at the invoices received, and the invoice will arrive weeks later. In that window the budget seems in line. It's not. This article explains the difference between actual costs and commitments, why ignoring it is the most common way to discover an overrun too late, and how to track it even while staying in Excel.
Actual and committed: the difference
Iactual costs(actual cost) are the costs already incurred for the work carried out and accounted for. The reference definition is that ofMicrosoft Project documentation: the costs incurred for the work already performed by the resources, plus any other recorded costs. In practice: invoices received, hours reported, expenses approved.
Thecommitments(committed costs) are the costs that you are already obliged to pay even if they are not yet accounted for: a purchase order issued to the supplier, a contract signed with an external company, an order confirmed in writing. They are not yet accounting costs, but they are money that will come out: the only unknown is when.
The difference is not bureaucratic: the two numbers answer two different questions. Actuals respond to "how much I have already spent", commitments to "how much I have already promised to spend". And to govern a project, the second question is the one that matters first.
Because looking only at invoices is deceiving
Take a project with budget of 100,000. Example (fictitious data): halfway through execution the staff is 30,000 — less than a third of the budget, everything seems in order. But the orders already issued are worth 45,000: the real exposure is 75,000, and half the work is still missing. The project is not 30 percent of the budget: it is already three-quarters exposed, and rising.
The mechanism is always the same. Weeks pass between the order and the invoice - delivery, verification, accounting - and in those weeks each report based on actuals alone photographs a project that no longer exists. Looking only at invoices is misleading because it confuses "how much I have already paid" with "how much I have already committed to paying": the second quantity grows earlier, and signals problems earlier.
How to track commitments in Excel too
Even by staying on a spreadsheet it can be done, with a simple discipline:
- Add the To Do columnnext to the Headcount, one line per cost line.
- Record the order when it arises, not when the invoice arrives: that's when the cost becomes predictable.
- Calculate total exposure:
= Actual + Commitments + Estimate to finish. It's the number to watch each week, not the total headcount. - Move the amount from Commitments to Actualswhen the invoice arrives: the commitment is not added twice, it is transformed.
- Compare exposure to budgetline by line: the anticipated deviation is what allows you to intervene in time.
The weak point is discipline: the To Do column works as long as someone always updates it, and forgetting an order is the easiest mistake in the world — especially verbal orders, the ones that never pass through the purchasing department. In structured project control, commitments and actuals are two distinct quantities managed by the tool; however, the logic is exactly the one you apply in the sheet, as explained in the [guide to project budget tracking](/controlroom/guide/controllo-budget-progetti-in-tempo-real-2026/).
The numerical example
Example (dummy data) — a development project with three cost lines, mid-execution:
| Line | Budget | Effective | Commitments | Estimate to finish | Total exposure | Deviation |
|---|---|---|---|---|---|---|
| Design | 20,000 | 18,000 | 0 | 0 | 18,000 | -2,000 |
| External Development | 50,000 | 12,000 | 30,000 | 8,000 | 50,000 | 0 |
| Licensing and Infrastructure | 30,000 | 5,000 | 0 | 22,000 | 27,000 | -3,000 |
| Total | 100,000 | 35,000 | 30,000 | 30,000 | 95,000 | -5,000 |
Looking only at the headcount, the project has consumed 35,000 out of 100,000 and all seems calm. The total exposure says 95,000: the residual margin is 5,000, and any unexpected event consumes it. The "External development" line is the one that deserves attention: 30,000 orders already issued against 12,000 invoiced means that the bulk of the spending has already been decided, even if not yet accounted for.
From total exposure to forecast
In my opinion, the minimum metric to read each week is total exposure, not billed spend.
The total exposure is today's photograph: staff, commitments and estimates to finish what has already been started. Theforecastit is the projection at the end of the project: the same logic extended to everything that remains to be done, revised every time the plan changes. It is the step that transforms budget control from final to forecast, and is the basis of techniques such as [estimate at completion](/controlroom/guide/ai-earned-value-management-previsionale-interpretativo-2026/).
If the comparison between exposure and budget shows a deviation, the next step is to understand the cause: the [cost variance analysis](/controlroom/guide/controllo-budget-progetti-in-tempo-real-2026/) serves exactly this, distinguishing what depends on prices from what depends on quantities.
The next step
Tracking commitments and actuals on a sheet is possible, and this article has shown you how. However, if there are more than one projects, or the sheet is updated by multiple people, the To Do column stops being reliable just when it is needed most. ControlRoom treats commitments and actuals as separate quantities and calculates total exposure automatically - you can see for yourself with a [free guided demo](/controlroom/demo/). If, however, you need to take the data out - for example in reports for a committee - keep in mind that ControlRoom's Free plan, in preparation, will include 3 one-off PDF/PPTX exports; for everything else, the demo shows how the full product works.
For further information
To keep commitments, actuals, and variances in one view instead of separate sheets:ControlRoom Free: how to get started in 15 minutes, the step-by-step guide to the free workspace.