Compare committed costs with actual job costs without double counting

Committed costs and actual job costs answer different questions. A signed subcontract or approved purchase order shows an obligation the project has made. An invoice or recorded direct cost shows activity that has reached another stage. Adding the full commitment to the invoices without identifying the overlap can make the job appear more expensive than it is.

Use a cost bridge that follows one source key from commitment through invoice, accounting record and payment. Compare the stages; do not total them as if they were separate costs.

Define the stages used by your systems

Procore describes committed costs as contractually agreed costs such as subcontracts and purchase orders, even when payment has not happened. Its standard budget view documentation separately describes committed costs, direct costs, job-to-date costs and pending changes.

Your contractor’s software may use different names or calculations. Write the local definitions at the top of the monthly workpaper. A practical bridge can keep these facts separate:

• Approved commitment: current approved subcontract or purchase-order value.
• Invoiced to date: supported vendor or subcontractor invoices received under that commitment.
• Recorded actual: the amount represented in the accounting or approved job-cost report for the same source items.
• Paid to date: cash payments matched to those invoices or other approved records.

These columns are a reconciliation structure, not a prescribed accounting method. The responsible accountant establishes recognition and report rules.

Give each obligation one source key

Use a stable reference such as J417-SC-08 on the subcontract, approved changes, invoices and payments. Keep the job, vendor and cost code with the key. When an invoice arrives, match it to that commitment before deciding whether it is new cost activity.

Intuit explains that an accepted purchase order can be added to a bill, expense or check, linking the transactions and allowing partial quantities or amounts. Availability depends on the QuickBooks subscription and setup. The control lesson applies more broadly: carry the source relationship forward rather than re-entering the commitment as an unrelated actual.

Worked example: a $120,000 subcontract

Illustrative example. Job 417 has framing subcontract J417-SC-08:

The remaining approved commitment before other adjustments is $48,000: $120,000 less $72,000 invoiced to date. The job review does not report $192,000 by adding the $120,000 commitment and $72,000 of invoices. The invoices consume part of the commitment.

The $12,000 difference between recorded actual and paid to date is also not a second cost. It is an invoice-payment timing difference that should be traced through the contractor’s payable and cash records.

Build a bridge by cost code

For each open commitment, calculate and explain:

1. Original approved amount.
2. Approved increases and decreases.
3. Current approved commitment.
4. Supported invoices to date.
5. Recorded actuals tied to those invoices.
6. Payments applied.
7. Remaining commitment and open exceptions.

Group the bridge by the same job and cost code used in the approved reports. If a vendor invoice uses a different cost code, do not move it silently to make totals agree. Record the mismatch, identify who owns the coding decision and set the next review date.

Investigate differences in a useful order

Start with source keys, then dates and amounts:

• Commitment in the project system with no matching approved record in the workpaper.
• Invoice with no commitment or documented exception.
• Approved change missing from the current commitment value.
• Invoice represented in both a linked bill and a separate imported transaction.
• Accounting actual with the wrong job or cost code.
• Payment recorded without a matching invoice under the agreed workflow.

Keep pending proposals outside the approved commitment column unless the contractor’s report definition explicitly includes them. If management wants a forecast view, show it separately and label the formula.

Hand the reviewer one reconcilable result

The monthly packet should state the report names, cutoff date, filters and definitions used. It should show the commitment total, invoiced total, recorded actual total, paid total and exceptions by source key. A reviewer should be able to open one line and reach the contract, changes, invoices and payment evidence.

Use the change-order handoff guide to keep approved changes attached to the right commitment. The weekly project-manager packet helps collect the field and approval evidence before the monthly bridge is prepared.

A dedicated construction bookkeeper can maintain this bridge and surface exceptions. Project managers, authorized approvers and the responsible accountant retain their decisions over scope, payment and accounting treatment.