Costs

Costs

Costs are what you incur to achieve a result (output).

They include the internal costs of running a project: people, facilities, expense, etc. They may also include the Price that you pay to a supplier for any purchased goods or services.

Costs are quantifiable in money terms and include:

• Totally Variable Costs. Things that are wholly attributable to, additional and varying with the extent or scope of the output.
• Allocated Costs. A share of costs allocated to achieving a result but not directly varying with the output.
• Provisions. Potential costs that may or may not be incurred but should prudently be included

While not normally counted as part of project costs, in choosing which projects to pursue decision makers will also consider Opportunity Costs. These are the value of benefits foregone by not pursuing another project or opportunity. This is usually equated to the value of the next best alternative.