Committed and Managed Costs
A third way to categorise expenditure is based on the relative ease or difficulty of doing without the materials, labour or equipment that incurs a cost.
For example, if an ODL institution entered into a long-term lease for additional office space to accommodate a planned expansion of its courses, it may be difficult to break the lease without a significant financial penalty. Likewise, once a staff member is confirmed as a permanent employee, it may be necessary to incur substantial expenditure in redundancy payments if the position is no longer necessary. In most cases, such expenditure should be categorised as a committed cost.
For example, if resources are limited, it may be possible to postpone the revision of a particular course for one or more years. Staff training, foreign travel and entertainment expenses are often treated as managed costs. When an ODL institution needs to cut back on its expenditure, it is managed costs that should be targeted.
Just because a cost is committed does not mean that it cannot be controlled. For example, although a particular institution might consider it essential to provide learners with photocopies of supplementary materials, procedures need to be put in place to ensure that such expenditure does not exceed the budgeted amount.