SAB5#72_Cost_Types

SAB5#72_Cost_Types

1. Variable Costs

   • These costs change with the amount of production or the amount of work.

2. Fixed Costs

   • These costs do not change as production changes

3. Direct Costs

   • These costs are directly attributable to the work on the project

4. Indirect Costs

   • Are overhead items or costs incurred for the benefit of more than one project.

5. Internal rate of return

   • Is the amount of money the project will return to the company that is funding it. (usually expressed as a percentage )

6. Depreciation

   • This is the rate at which your project loses value over time

7. Lifecycle costing

   • How much you expect that the project cost ? (develop, support and use by the customer).

8. Opportunity cost

   • It’s the money you don’t get because you chose not to do a project.

9. Benefit cost ratio

   • This is the amount of money a project is going to make versus how much it will cost to build it.
   • BCR

10. Net present value

    • Money you’ll get in three years isn’t worth as much to you as money you’re getting today. 
    • NPV
    • This is the actual value of the project less all of the costs associated with it

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