Actual Cost
A cost that has genuinely been incurred, work actually performed, materials actually delivered, an invoice actually received, as opposed to a [[concept-committed-cost|committed cost]], which only reflects what's been legally obligated through a signed contract or purchase order regardless of whether the work has happened yet.
Why it matters
Actual cost is the only number that reflects reality rather than a legal promise. A budget comparison that only looks at actual cost against the original bid, without also tracking committed cost, can miss real financial exposure that's already locked in through signed subcontracts but hasn't shown up in an invoice yet.
On a real project
A concrete subcontractor has an $800,000 signed contract (committed cost), but after finishing the foundation and half the slab work, only $500,000 of actual invoices have come in so far, work performed and billed to date.
Who this matters most to
A Cost Engineer compares actual cost against both the original budget and the current committed cost regularly, since a gap between the two is often the earliest real signal that a project's financial outcome is drifting from what was planned. A Project Manager uses actual cost, alongside committed cost, to decide whether a subcontractor's pay application should be approved as submitted.
Where this goes wrong
A project reports actual cost as its only measure of financial health, and it tracks close to budget for months, right up until a wave of already-committed subcontracts and change orders all convert to actual cost at once near the end of the job, revealing an overage that had actually been locked in long before anyone noticed.