This lesson covers the four types of costs in project management:
[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]
Project Management Professional (PMP) - PMI
Our online PMP training course educates on how to initiate, plan and manage a project, as well as the process behind analyzing risk, monitoring and controlling project contracts and how to develop project schedules and budgets.