If the financial systems allow, it is useful to break costs down into a cost breakdown structure (CBS). variable direct costs or fixed indirect costs. salaries, fees etc.Īny cost will be a combination of attributes from these pairs, e.g. Variable costs fluctuate with the amount used, e.g. These base costs have two pairs of possible attributes:ĭirect and indirect: costs that are directly attributable to the project, programme or portfolio are direct costs, whereas overheads shared with other parts of the host organisation are indirect.įixed and variable: fixed costs remain the same regardless of how the work proceeds, e.g. capital items such as equipment purchase.expenses such as staff travel and subsistence.consumables such as power or stationery.accommodation and infrastructure such as office rental or support for ICT systems.resources such as staff or contractors.This is typically made up from costs associated with:
The base cost is the cost of the work according to the schedule. These are refined as the achievability and desirability of the work are investigated and a detailed understanding of scope, schedule and resource is developed. Initial cost estimates are based on comparative or parametric estimating techniques. It forms the baseline against which the actual expenditure and predicted eventual cost of the work is reported. Typical steps in the budgeting and cost control procedure are shown below:Ī budget identifies the planned expenditure for a project, programme or portfolio. implement systems to manage income and expenditure.
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