IN CONSTRUCTION

Types of
Costs CONSTRUCTION CONTRACTS MANGEMENT
BY

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 Definition:

Costs that do not change with the level of

output or activity in a construction
project.

1. Examples:

FIXED COSTS
Rent, salaries, insurance, depreciation.

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SLIDE #1
 Definition:

Costs that vary directly with the level

of construction activity.

2. Examples:
VARIABLE COSTS
Raw materials, direct labor, fuel for
machineries.

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SLIDE #2
 Definition:

Costs that have both fixed and variable

3. components.
SEMI-
VARIABLE Examples:

COSTS (MIXED
Utility bills for the site office (fixed
COSTS): base charge plus variable usage),
equipment maintenance.

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SLIDE #3
 Definition:

Costs that can be directly attributed to

a specific construction project.
4.
DIRECT Examples:
COSTS:
Direct labor, materials specific to the
project, subcontractor fees

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SLIDE #4
 Definition:

Costs not directly traceable to a

specific project but necessary for
5. overall operations.

INDIRECT Examples:
COSTS
Administrative expenses, site security,
general utilities.

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SLIDE #5
 Definition:

Costs required for the day-to-day

operation of the construction business.
6.
Examples:
OPERATING
COSTS: Site office expenses, staff salaries,
equipment rentals.

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SLIDE #6
 Definition:

Costs not related to the core

construction activities.
7.
NON- Examples:
OPERATING
COSTS Interest on loans, legal fees,
depreciation of office equipment.

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SLIDE #7
 Definition:

Costs that have already been incurred

and cannot be recovered.

Examples:
8.
SUNK COSTS Initial design fees, preliminary surveys,
initial permit costs, initial setup costs.

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SLIDE #8
 Definition:

The potential benefits lost when

choosing one construction project over
another.

9. Examples:
OPPORTUNITY
Foregone profit from not pursuing an
COSTS:
alternative project, rental income lost
from using owned property as a

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construction sit

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SLIDE #9
 Definition:

Costs that can be influenced or

regulated by management.

10.
Examples:
CONTROLLA
BLE COSTS: Overtime labor costs, discretionary
purchases of materials, marketing
expenses.

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SLIDE #10
 Definition:

Costs that cannot be changed or

11. influenced by management in the short
UN- term.
CONTROLLA
BLE COSTS: Examples:

Depreciation of equipment, long-term

lease payments for equipment.

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SLIDE #11
 Definition:

The cost of constructing one additional

unit or structure

12.
Examples:
MARGINAL
COSTS : Additional materials and labor for one
more unit of housing or one extra floor
in a building..

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SLIDE #12
 Definition:
13.
Costs that do not involve actual cash
IMPUTED
outlay but represent the value of
COSTS resources used.
(IMPLICIT
COSTS): Examples:

Value of company-owned land used for

a project, owner's time and expertise

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SLIDE #13
 Definition:

Costs that involve direct monetary

payment.
14.
Examples:
EXPLICIT
COSTS: Payments to subcontractors, purchase
of materials, utility bills

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SLIDE #14
 Definition:

Additional costs associated with a

15. particular construction decision.
INCREMENTA
L COSTS: Examples:

Extra costs for expedited shipping of

materials, additional expenses for

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design changes.

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SLIDE #15
 Definition:

Costs that can be eliminated if a

particular decision is made.

16.
Examples:
AVOIDABLE
COSTS: Costs of a canceled project phase,
variable costs saved by reducing
project scope.

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SLIDE #16
 Definition:

Long-term costs that cannot be easily

changed or avoided.
17.
COMMITTED Examples:
COSTS
Lease payments for equipment,
salaries for key staff under contract.

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SLIDE #17
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BY
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Ilamparithi BoologaSundaraVijayan