Learn Finance · Project & Cost Finance · Task A3. See the money you've committed, not just the money you've spent — so "remaining budget" is the truth.

Also drill the concepts in PMP Reps → Finance · Cost & EVM.

What it is

There are three numbers for any budget line, and they move at different times:

Committed — money you've promised (a signed PO, a contract) but not yet paid. An encumbrance.
Actual — money you've actually spent (the invoice is paid).
Remaining / available — the baseline minus both committed and actual.

The trap: watching only actuals. A line can look "90% unspent" while a $300k PO has already been signed against it — the money is gone, it just hasn't been paid yet.

Available = Baseline − Actuals − Open commitments

Why it matters

Commitments are how budgets get silently blown. If you only track actuals, you'll keep "spending" money you've already committed — and discover it at invoice time, too late.
It's the early-warning signal. A commitment is visible the moment a PO is raised, weeks before the invoice lands — so you see the budget move before the cash does.
It makes "remaining budget" honest for every go/no-go decision.

Where you do it in VanillaPM

Everything below is in Project → Budget (apps/budget). A step-by-step:

Raise the commitment. When a PO or contract is raised in the procure-to-pay chain, it creates a Commitment against the budget line — with a CommitmentSource (the PO / contract) and a CommitmentStatus of open. The money is now encumbered: promised, though not yet paid.
Watch it convert to actual. As invoices land and are paid (B5), the commitment draws down — status moves open → partially-invoiced → closed and the open balance falls as the actual rises.
Read the real available figure. The budget view shows, per WBS node, baseline · committed · actual · remaining — where remaining = baseline − committed − actual. That's the money you can still spend, not the flattering "baseline minus what's been paid" that ignores everything already on order.

Walked example — Meridian

The integration work package has a $400,000 baseline. The team signs a $300,000 vendor PO for middleware. So far $120,000 of invoices have been paid.

	Amount
Baseline (integration)	400,000
Actual (invoices paid)	120,000
Open commitment (PO, not yet invoiced)	180,000
Remaining / available	100,000

Watching actuals alone, you'd think $280,000 was left. The truth is $100,000 — because $180,000 is already promised to the vendor. That $180k gap is exactly where overspend hides.

The numbers

Remaining = 400,000 − 120,000 (actual) − 180,000 (open commitment) = 100,000.

As the vendor invoices the remaining $180k, those amounts move from committed to actual — total spend is unchanged, the category shifts. The remaining figure only changes if you commit or spend more.

Controls & assurance

Every PO/contract raised as a commitment the moment it's signed — not when it's invoiced.
Budget reports show committed + actual, never actual alone.
Open commitments reconcile to live POs — a stale open commitment (goods received, not converted) is a reconciliation flag.
Commitments trace to the WBS node they encumber.

Best practices & pitfalls

Do judge "remaining budget" on committed + actual — that's the spendable truth.
Do close commitments as invoices convert them, so the open balance stays accurate.
Pitfall: approving new spend because "the line still has budget" — when it's all committed. The line is full; you just haven't paid yet.
Pitfall: leaving commitments open after the work's done — it understates your available budget and freezes money you could redeploy.

Practise question

Q1. A line has a $500k baseline. You've paid $150k of invoices and have a $250k open PO. How much can you still commit on this line, and why is the "actuals-only" view dangerous here?

Answer: Available = 500 − 150 − 250 = $100,000. The actuals-only view shows $350k "left" (500 − 150) — but $250k of that is already promised to a supplier. Spending against the $350k illusion overcommits the line by $250k.

Terms used here

Commitment / encumbrance — money promised (PO/contract) but not yet paid.
Actual cost — money actually spent (invoice paid).
Available / remaining — baseline − actuals − open commitments.
Commitment source — the PO or contract behind an encumbrance.
Related: Measure performance with Earned Value — note EVM uses actuals (AC); commitments are a separate funds-control view.

What the sponsor / PMO expects

A remaining-budget figure that nets off open commitments, reconciling to live POs. "We have budget left" is only credible when it means after what's already promised — otherwise it's a surprise waiting for invoice day.

Track commitments vs actuals