Commitments

Why It Matters

Commitments bridge the gap between estimate and reality, making variance traceable. Every project teaches the next one.

A Commitment is a recorded financial obligation within a project. It represents the transition from estimated cost to confirmed cost — a committed amount for materials, subcontractor work, equipment, or other procurements.

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Commitment vs. Baseline vs. Actual

Concept	Meaning
Estimate	Predicted cost based on cost logic and market context
Baseline	Approved estimate that governs cost tracking
Commitment	Actual financial obligation entered into (purchase order, contract award)
Actual Cost	Final invoiced amount

A commitment exists between the baseline (what was planned) and the actual cost (what was paid). It captures confirmed obligations before final invoices arrive.

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Commitment Model

Each commitment includes:

• Commitment line items — individual cost entries with quantity, unit price, and total
• Status — lifecycle state reflecting the commitment’s progress
• Linked cost groups — association with project cost groups for variance tracking
• Source evidence — purchase orders, contracts, or subcontractor agreements
• Bid proposal ID — link to the winning proposal when created from a bid award

Status Lifecycle

Draft → Issued → PartiallyConsumed / Consumed → Closed

A commitment in any state can also transition to Cancelled — blocked only when substantiated linked actual costs exist, so an unsubstantiated entry can never prevent cancellation. Consumed is auto-calculated from substantiated linked actual costs: when all lines are fully consumed the commitment is Consumed; when only some are, it is PartiallyConsumed. An unreviewed figure with no evidence can never close a subcontract.

Each line carries its own status: Open / PartiallyConsumed / Consumed / Closed / Cancelled.

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Commitment Revisions (Change Orders)

An issued commitment’s value can change through append-only revisions (change orders). A revision records what each affected line was and became, carries a sequential revision number per commitment plus a reason and effective date, and can add a line the commitment did not previously have.

Each revision is in force the moment it is recorded — committed value and exposure move with it. The reconciliation invariant holds at all times:

original line total + Σ(new line total − previous line total) == line total

Both sides of every change are persisted, so the history reads without dereferencing the rest of the chain. This lets a commitment register show Original / Approved Changes / Revised without mutating the approved baseline.

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Three-Layer Variance

Commitments enable a three-layer variance analysis:

1. Baseline → Commitment — procurement variance: did we buy at the planned price?
2. Commitment → Actual — execution variance: did final costs match the commitment?
3. Baseline → Actual — total project variance

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Business Rules

• Commitments can only be created against a project with an active baseline
• Issuing a commitment requires at least one line item
• Linking an actual cost from a different baseline to a commitment line is blocked
• A commitment line with linked actual costs cannot be removed
• Cancellation is rejected when substantiated linked actual costs exist

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Workflow Role

1. An approved baseline defines planned costs by cost group
2. As procurement happens, commitments are recorded against those cost groups
3. Bid awards automatically create draft commitments linked to the winning proposal
4. If an issued commitment’s value changes, record a change order (commitment revision) instead of editing the past
5. When invoices arrive, actual costs replace or refine commitment amounts
6. Variance reporting compares actuals against both commitments and baseline