Video - InEight Estimate - Classifying Direct & Indirect Costs

TRANSCRIPT

In this video, we'll look at how to change the cost segment of a cost item to be either direct cost, job overhead, or business overhead. By definition, direct costs pertain directly to project deliverables and are therefore assigned to pay items, and indirect cost items contain overhead and typically aren't assigned to pay items. But for cost items assigned to pay items, you can decide whether they'll be a direct or indirect cost. Mobilization is a good example where even though the cost is assigned to a mobilization pay item, you may want it to be considered an indirect cost as it doesn't contribute to any discreet work.

In that case, you can change the cost segment from direct cost to job overhead, and it will now be considered an indirect cost even though it's assigned to a pay item. To change the cost segment, open a cost item record by double clicking on the CPS position code and select from the cost segment dropdown. Be sure to click OK to save your selection. Conversely, prime bond is an example of an indirect cost that you could reclassify from business overhead to either job overhead or even direct cost.

In this video, we showed how not all cost items assigned to a pay item must be a direct cost, and in fact, you have more flexibility in how you build out the cost of your job and assign a cost segment to your different cost items.