Budgets & cost control

What this covers

A job is agreed at a number and then spent down over months across dozens of separate trades. Keeping that predictable is not a matter of watching one total. It means knowing, trade by trade, what was planned, what has been spent, what is already promised, and where each part is going to land.

Cost Control is that record, and it is the central hub for project financials.

The budget

The budget is held by Cost Code — the same classification the Estimate used — so framing, plumbing, tile and cabinetry each carry their own planned amount instead of disappearing into a single figure.

It is created by a Budget Adjustment: the allocation of contract dollars to Cost Codes. The Fee is not a budget adjustment — it is what is left over, which is why the rule reads Cost Code budgets + Fee = contract amount.

Budgets are revised in two ways, and the distinction is deliberate.

Internal adjustments move money between Cost Codes and must net to zero once the Fee is included. If tile runs over and framing runs under, the plan reflects that without the job’s total moving. A reallocation can re-cut the budget; it cannot grow it.

Change order adjustments change the total, and they exist only against a selected change order, whose amount they must total exactly.

The four numbers

Against every Cost Code, a project carries four figures side by side.

Figure	What it is
Budget	What the work was planned to cost
Actual	What has been invoiced against it so far
Committed	What is already promised but not yet invoiced
Forecast	What the code is now expected to finish at

Committed is the one that separates a careful job from a surprising one. Material ordered but not yet invoiced is spent in every practical sense, and counting it the day the order goes out is what makes a problem visible while there is still time to act on it.

A commitment here is a Purchase Order plus any change orders written against it, so the committed figure is the current obligation to that vendor rather than the amount first ordered.

Each figure drills back to the documents behind it, so any number on a summary can be traced to the invoices that produced it.

Actual cost is only as good as its tie to the books. The costs shown here are the job costs KI owns, and they are expected to match cost per job in QuickBooks. If a Cost Control figure and the general ledger disagree, treat the number on screen as unproven until the two are reconciled — there is no automated reconciliation today, so that comparison is done by hand.

The forecast

Forecast is a judgment, not arithmetic: what the team now expects a Cost Code to finish at, given what has been bought and what is left to do. It is not the same as the budget, and the difference between the two is the whole point — it is where a problem shows up first, usually well before it reaches an invoice.

Forecast and margin analysis are the same thing under two names, and it is stored under Cost Control rather than as a separate record elsewhere. Forecasts are saved as dated snapshots with a PDF kept for each, so the question is not only where a job will land but whether that answer has been moving and in which direction. A forecast that has drifted steadily over three months is a different conversation from one that moved last week.

Related

• Part 2 — Objects and rules — the balancing equations behind the budget
• Contracts and change orders — what an executed change adjusts
• Purchasing and vendors — where committed cost comes from
• Billing and accounting — the coded invoices behind actual cost