Time
5 hours 14 minutes
Difficulty
Intermediate
CEU/CPE
10

Video Description

This lesson covers the four types of costs in project management:

  • Direct
  • Indirect
  • Fixed
  • Variable

[toggle_content title="Transcript"] In the cost knowledge area you have to understand there are four types of costs. The first being direct cost, the second being indirect cost, the third being fixed cost and the fourth being variable cost. You can also use them in this combination as a fixed cost that's direct or a fixed cost that's indirect. Or You could also say a variable costs that's direct or a variable cost that's indirect. Some examples of direct costs are costs that are specific for your project. Labor, material, that are used for your project is a direct cost to that project. Indirect costs are shared costs amongst the organization. Example of an indirect cost could be the security that works around the building. You are not paying for that security for your project specifically but your organization is, you're paying indirectly to that security guard. A fixed cost is a cost that does not change over time. An example of a fixed cost could be the building lease if it's specific for that project or well, that building lease would be an example of a fixed indirect cost. A variable cost is a cost that changes over time. So if you're thinking up the building, and the summer time air conditioning is going to be high. So that Variable cost is going to be high in the summer time and low in winter time. But in the normal time you are going to have heating which is going to be high in the winter and lower in the summer. Those are examples of variable costs. [/toggle_content]

Video Transcription

00:04
So in the cost knowledge area, you have to understand there are four types of costs, the first being direct cost. Second, being indirect costs, the third being fixed costs
00:14
and the fourth being variable costs.
00:17
And you can also use them in this combination is,
00:20
or a fixed cost that's direct
00:22
or fix posits indirect. Or, you could say, a variable cost that's direct or very because it's indirect.
00:28
Some examples of direct costs are costs that are specific for your project.
00:34
So labor material that are used for your project is a direct cost to that project.
00:40
An indirect cost.
00:42
Our shared cost amongst the organization,
00:45
so example of an indirect costs could be the security that walks around the building. You're not paying for that security for your project specifically, but your organization is so you're paying indirectly to that security guard.
00:58
A fixed cost is a cost that does not change over time,
01:02
so an example
01:03
of a fixed cost could be
01:06
the building lease. If it's specific for that project or
01:10
well, that building lease would be an example of a fixed and direct cost.
01:14
Um,
01:15
a variable cost is a cost that changes over time. So we're thinking about the building and the summertime Air conditioning is gonna be high, so that variable cost is going behind the summertime in low in the wintertime.
01:27
But in the wintertime, you're gonna have heating,
01:30
which is gonna be high in the winner and low in the summer.
01:34
Those are examples of variable costs.

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Instructed By

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Vince McKeown
Senior Program Manager at FGS, LLC
Instructor