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The document outlines various project cost categories, including direct, indirect, fixed, variable, overhead, opportunity, sunk, soft, unforeseen costs, and profit margins. It provides industry-specific examples for construction and software/IT projects, detailing relevant cost components for each. Understanding these categories is essential for effective project budgeting and financial management.

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Wil
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24 views2 pages

File 1

The document outlines various project cost categories, including direct, indirect, fixed, variable, overhead, opportunity, sunk, soft, unforeseen costs, and profit margins. It provides industry-specific examples for construction and software/IT projects, detailing relevant cost components for each. Understanding these categories is essential for effective project budgeting and financial management.

Uploaded by

Wil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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General Project Cost Categories

1. Direct Costs
- Labor (wages, benefits)
- Materials (raw materials, supplies)
- Equipment (rental, maintenance)
- Subcontractors

2. Indirect Costs
- Administrative expenses (office supplies, management salaries)
- Utilities (electricity, water)
- General conditions (site security, temporary facilities)

3. Fixed Costs
- Pre-determined expenses unaffected by project scale (e.g., leases,
insurance)

4. Variable Costs
- Expenses fluctuating with project activity (e.g., fuel, hourly labor)

5. Overhead Costs
- Operational overhead (office rent, software licenses)
- Project-specific overhead (quality control, safety measures)

6. Opportunity Costs
- Benefits foregone by choosing one project over another

7. Sunk Costs
- Irrecoverable past expenses (e.g., abandoned prototypes)

8. Soft Costs
- Design/engineering fees
- Permits and legal fees

9. Unforeseen Costs
- Contingency reserves
- Price fluctuations (material/currency changes)
10. Profit & Margin
- Profit markup and financing costs

Industry-Specific Examples
- Construction Projects:
- Surveying, foundation work, above-ground structures
- Labor, materials, equipment, subcontractors

- Software/IT Projects:
- Labor (developers), licenses, cloud services

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