If you've started using construction management software such as Procore, you've probably come across the term Commitment. While the word sounds straightforward, its meaning within construction project management is often misunderstood.
A commitment is more than simply work that has been agreed. It represents money that a project has committed to spend through a subcontract, purchase order or other approved agreement. By tracking commitments, project teams can understand future project costs before invoices arrive and payments are made.
In this guide, we'll explain what commitments are, why they matter, how they relate to budgets and project cost control, and how platforms such as Procore use them to help manage the financial performance of a construction project.
What Is a Commitment in Construction?
When I first encountered the term Commitment in Procore, I assumed it simply referred to work that had been agreed.
While that's partly true, a commitment is actually a financial concept used to track money that a project has agreed to spend.
Understanding commitments is important because they help project teams see future project costs before invoices are received and paid.
What Is a Commitment?
A commitment is a financial obligation that has been approved or agreed as part of a construction project.
In simple terms:
A commitment is money the project has committed to spend.
The commitment may be associated with:
- A subcontract
- A purchase order
- Labour
- Materials
- Equipment hire
- Specialist services
Once the commitment has been approved, the project is expected to incur that cost.
A Real World Example
Imagine a contractor hires an electrical subcontractor to complete all electrical works on a project.
The agreed contract value is: €150,000
As soon as that subcontract is awarded:
The project now has a commitment of €150,000.
No money may have been paid yet.
No invoice may have been received.
However, the project has committed to spending that money.
Why Are Commitments Important?
Without commitments, project managers would only see costs after invoices arrive.
This can create surprises.
For example:
| Description | Amount |
|---|---|
| Project Budget | €500,000 |
| Money Paid So Far | €100,000 |
Everything looks fine.
However, there may also be:
- €250,000 in approved subcontracts
- €75,000 in purchase orders
These future obligations need to be tracked.
Commitments help project teams understand:
- What has already been spent
- What has been committed
- What remains available in the budget
How Commitments Relate to Budgets
A commitment forms part of the financial journey of a construction project:
From Budget to Payment
- Budget Created
The project team allocates money for a specific scope of work. - Commitment Created
A subcontract or purchase order is awarded, committing part of the budget. - Invoice Received
The contractor or supplier submits an invoice for work completed. - Payment Made
The invoice is approved and payment is issued.
This process allows project teams to track future costs before money has actually been spent.
Commitments in Procore
In Procore, commitments are commonly used to manage:
- Subcontracts
- Purchase Orders
- Approved changes to commitments
They allow project teams to:
- Track committed costs
- Monitor budget performance
- Review contractor agreements
- Manage variations and changes
This gives project stakeholders a clearer picture of the project's financial position.
Commitment vs Actual Cost
These terms are often confused.
Commitment
Money that the project has agreed to spend.
Actual Cost
Money that has already been invoiced or paid.
For example:
| Description | Amount |
|---|---|
| Commitment | €150,000 |
| Invoices Received | €75,000 |
| Amount Paid | €50,000 |
The project is committed to spending €150,000, but only €75,000 has been invoiced so far.
Key Takeaway
A commitment is not money that has already been paid.
It represents money that a project has formally agreed to spend through a subcontract, purchase order, or other approved agreement.
By tracking commitments, construction teams can understand future project costs, manage budgets more effectively and avoid unexpected financial surprises.
