ABSTRACT
Identifying the cost types and components is essential in preparing the costs as well as analyzing and eventually controlling them. Categorization of cost types provides an indication of which costs are more likely to be controllable. Breaking a cost into its four possible components reveals what element of what component needs to be focused on for both planning and controlling purposes. The need for analyzing both cost elements in order to be able to control the outcome is re-emphasized. The elements of a task’s cost components contain information that constitutes the basis of resources needed to deliver that task. That information is key for cost and time planning of the project, which then serves as the project’s progress evaluation basis. Details and examples are provided to explain the relationship between cost types, their components, and the elements of those components that need to be focused on in order to control the resulting cost. Since the number of activities can easily exceed several thousand for a medium size project, prioritizing which costs to focus on by categorization of their cost types is emphasized from a practicality perspective.
