Which type of costs is directly attributable to completing the project work?

Direct costs are expenses that can be directly traced to a specific project or activity. In the context of project work, these costs include expenses that are incurred directly as a result of undertaking the project, such as salaries for workers who are exclusively assigned to the project, materials and supplies used specifically for the project, and any other costs that can be pinpointed directly to the job being completed.

In contrast, indirect costs, such as overhead costs or general and administrative costs, cannot be tied to a specific project. They pertain to the broader expenses needed to support the overall operations of the organization rather than costs incurred specifically for a project. For example, rent and utilities for office space that serves multiple projects would fall into this category, as they are not specific to just one project.

Understanding the distinction between direct and indirect costs is crucial for budgeting, financial forecasting, and overall project management, as it helps ensure that the costs directly tied to project execution are properly accounted for. This direct association allows project managers to closely monitor spending and assess the project's financial feasibility effectively.