Direct Cost Vs Indirect Cost in Project Management

企业是关于管理费用的。因此，管理成本是确保盈利能力和业务生存不可或缺的一部分。

Expenses can be direct costs or indirect costs. The direct costs are tied to the product, while indirect costs do not link directly to the product but are essential for business operations.

Today’s blog post will discuss and differentiate direct and indirect costs in project management.

Direct Cost Vs. Indirect Cost

经营业务需要计算每笔费用，以确保浪费任何东西。考虑直接成本和间接成本将有助于减少不必要的成本并保持现金流量。

Projects, functions, and facilities require expenses.

What are Direct Costs in Project Management?

Direct costs are expenses tied directly to the product or the project.

直接成本变量或固定和联系the product price. Therefore, monitor your direct costs to control product price and taxes calculation.

如果是一个项目，控制直接成本对于控制预算至关重要。

直接成本由于不断变化的市场条件而异。损益表记录表明销售成本（COGS）部分的直接成本。

直接费用的示例

直接成本包括人工，原材料，消耗品，员工薪水，燃料等。所有直接努力towards a projector producing specific goods are direct costs.

项目管理中的间接成本是什么？

间接费用对于业务运营至关重要，但与产品或项目没有直接相关。此外，随着时间的流逝，这些成本相对稳定，并且更易于控制。

They record indirect costs in the operating expenses segment in an income statement.

Examples of Indirect Costs

Indirect costs include utilities, consulting, legal and financial fees, administrative expenses, maintenance expenses, phone, internet, rent, insurance, etc.

直接和间接成本的现实示例

Below is an example of direct & indirect costs appearing on a manufacturing company’s income statement.

In this case, XYZ Company manufactures a single product. In addition, each product unit’s labor, raw materials, and depreciation expenses are $3, $2, and $0.5, respectively.

Operating expenses are the indirect costs (fixed and semi-variable). The price for operating expenses is $35 over three months.

制造单个产品的总直接成本为$ 5.50。

The total indirect cost to make a single product is $35.

If XYZ Company sold 20,000 units of its product for $15 every three months, its direct and indirect costs would be as follows:

The following table shows the difference between direct costs and indirect costs:

Direct and Indirect Cost Chart

Budget = Direct Cost + Indirect Cost

Direct costs decrease, and indirect costs increase when the project duration increases. Therefore, adjust the project duration to optimize the budget or tweak direct and indirect costs for efficient cost utilization.

Why is it Important to Define Direct Cost & Indirect Costs?

您应该为记录定义直接和间接成本。

Direct costs directly affect product costs, taxes, and profits.

控制直接成本为业务提供了一个edge in the market and keeps the price competitive.

For projects, controlling the direct costs allows a project manager to reduce the expenses associated with the project while delivering a superior product.

Direct costs affect product design, price, and quality.

另一方面，控制间接成本对于确保组织的业务运营至关重要，大多数时候，这些成本分配在不同的项目之间。

Keeping track of your direct and indirect costs is essential when applying for government grants, investor funding, or loans from financial institutions.

Are Indirect Costs Included in Project Cost Estimates?

Projects have a fixed budget, and when projects exceed their costs, they affect other operations. Therefore, you must track these direct and indirect costs to ensure the project stays within the budget.

Direct costs are the first type of cost included in项目成本estimates。然而，组织必须为项目运作的间接费用分配资金。

Indirect costs are necessary for a project’s success and must be included in the project’s budget to avoid cost overruns.

Direct & Indirect Costs Considerations in Make-or-Buy Decisions

Sometimes, you must decide whether to make or buy a project component. These decisions are motivated by cost, quality, speed, and availability of technology; however, the key motivation is the costs.

如果更便宜的话，企业将进行外包。但是，通过外包，您必须考虑与生产产品相关的直接和间接成本。

In amake-or-buy analysis, direct costs are essential as they can fluctuate and significantly differ between different businesses and regions. For example, labor costs may be cheaper in developing countries.

An outside vendor can acquire the raw materials at a cheaper rate. Moreover, the required labor may not be available at your location but available at an affordable rate elsewhere.

Therefore, you can outsource tasks to an entity that can make the product at a lower cost, when possible, rather than making it in-house.

Indirect costs such as rents and leases are rarely variable and do not mostly affect make-or-buy decisions.

Other indirect costs such as utilities, maintenance, office supplies, and insurance are stable across most regions and businesses and thus do not affect make-or-buy decisions.

Making a make-or-buy decision has significant ramifications for an organization. For example, outsourcing may reduce costs but remove innovation and production capability, making you dependent on third parties.

Additionally, the business loses control over the production processes, which might affect the quality. A business exposes itself to external issues, such as market shocks or disruptions, that may affect its operational efficiency.

bob官网竞彩足球笔记：

燃料，电力和行政成本可以根据组织和项目的直接和间接成本类别置于直接和间接的成本类别中。

If fuel is directly involved in the production, it is a direct cost. In contrast, you can place administrative costs in the direct costs category due to their contribution to the production process.

为什么您应该知道直接和间接成本之间的区别

You should know the difference between direct and indirect costs as it helps you understand your project, product, and services. As a result, you can control the cost better, and your accounting will be robust.

It also helps in filing taxes and claiming returns. A few direct and indirect costs are tax-deductible, and you can claim the returns.

If you are receiving government grants, you need to know your direct and indirect costs. Government funding is strict about how you spend on direct and indirect costs. They also audit the expenses, and you will be in legal trouble in case of any discrepancy.

For example, project funding mostly allows direct costs, and you cannot invest the funds in indirect costs.

Understanding these costs makes accounting robust. You will understand your cash flow better and price the product competitively.

Conclusion

Direct costs tie directly to the specific product or project, thus directly influencing the product price or the project cost. Indirect costs do not tie to a specific product or project but are essential for business operations. An understanding of these costs helps you understand your business model, pricing your product competitively, and you can separate tax-deductible expenses.

Reviewing direct and indirect costs can help organizations track unnecessary expenses and control them to increase efficiency.