Within the Cost Breakdown Structure register, at the top of the breakdown, you have several default indirect cost items available for your use. These indirect cost items fall under two categories, independent and dependent cost items. There are several default indirect cost items that are dependent cost items. Dependent cost items are cost items whose costs depend on other costs, prices, or hours.
For example, when coming up with the cost for small tools, you can base it off of man hours. Let's say 50 cents per every man hour of the job will calculate the cost for small tools. Therefore, this cost is truly a dependent cost item because it depends on the number of man hours. Your default dependent cost items may include prime bond price, percent add-on, job financing, direct and indirect cost add-on, and man hour add-on.
If you don't see the default dependent cost item that you need, you can create a dependent cost by right-clicking on any row header in the CBS and select Insert Dependent Cost Item. Here you can choose what type of dependent cost item you would like to add. It's important to note if you need to use additional dependent cost items, you can create your own, but you must delete all the existing default dependent cost items first. Let's go through some of the dependent cost items.
First, double-click on the Prime Bond row header. The prime bond is basically the insurance for the job and is an irregular form. It uses bond rate tables to calculate the insurance cost for the project. For this example, choose "example general construction" from the table name drop-down list.
From the table you can see that it is coming up with 10.80 per 1000. Click OK to close the bond cost item record. Next, double click on the Direct Cost Add-on row header.
In the description column type "small tools". When you click or tab out of the column, you can see it gives you the Subject Cost shown here on the right. The Subject Cost is the cost that that cost item depends on, based on what is defined on the Cost Items Dependency tab as shown here. Here in the Dependency tab, you can see what contributes to your subject cost.
Go back to the Description tab. In the Cost Breakdown shown on the right, you can add a rate or a cost at the total level to have it applied to all your cost categories, or you can add it to a specific cost category level. In this case, type 10% in the Rate field at the labor cost category level. Click OK to close the form.
The CBS Register also contains two default indirect cost items that are independent, meaning the costs on these items are independent from any other cost items. Right-click and open the Job Management and Equipment cost item, and you can see the resources and production that drive this item's indirect costs. As you see here, this item and the general expense cost item look and function just like the other direct cost items you have in your CBS. In this cost item record, add a Secretary by typing LS-SEC in the code field.
Also, add a project superintendent by typing in LS -SUPT in the next code field. On the Production tab, enter the length of the job, which is originally estimated to be 70 days. You can adjust the duration of the overhead employees if you know they're not working the whole length of the project. When finished, click OK to close the form.
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