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1. ProjectCostManagement:
Types,Benefits,Importance&HowtoManage
ProjectCosts

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WhatIsProjectCostManagement?
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ProjectManagerRoleandResponsibilities
The project manager's role in this process is to ensure that the
project's budget is used efficiently, ensuring that the project is within
its allocated budget to avoid spending money on items or activities
which are not necessary for the completion of the project.
A project manager is responsible for the life cycle of a project from
start to finish. Project cost management is an essential aspect of the
job that needs to be done well to avoid complications.
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WhatIsCostManagementinProjectManagement?
To understand what cost management is, it is first essential to
understand what a project is.
A project can be defined as a temporary endeavor with a definite
beginning and end designed to produce a unique product, service,
or result.
Cost management is a part of project management that deals with
controlling the project's cost.
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TYPES OF COST
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1. Fixed Costs
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• Fixed costs stay the same and
do not change throughout the
project lifecycle.
• Examples of fixed costs
include setup costs, rental
costs, and other related costs.

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2. Variable Costs
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• Variable costs are costs that
change with the amount of
work involved with a project.
• Examples of variable costs are
hourly labor, the cost of
material, the cost of supply,
fuel for bulldozers, etc.
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3. Direct Costs
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• Direct costs are expenses that
are billed directly to the
project.
• Examples are team travel
expenses, team wages, costs
incurred for recognition and
awards for employees, etc.

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4. Indirect Costs
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• Indirect costs are costs that
are shared and allocated
among several or all projects.
• Examples include fringe
benefits and taxes.
• Fringe Benefits
• Monetary (such as
bonuses and allowances)
• Non-monetary (such as
subsidised meals, paid
holidays and pension
plans).

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5. Sunk Costs
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• Sunk costs are costs that have
been incurred on a project but
have not produced value
towards the project objectives.
• A money that has
already been spent and
cannot be recovered.
Examples include
• Salary for employees who
have been laid off.
• Machinery and Equipment

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5. Sunk Costs
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• Salary Laid off to stop
employing someone,
usually temporarily
because there is not
enough work to do:
Because of falling orders,
the company has been
forced to lay off several
hundred workers.
• Machinery and Equipment