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Topics: Cost Management, Organizational Project Management
Cost Estimates
PMBOK (Page 246) section Estimate costs mention below:

Indirect costs, if they are included in the project estimate, can be included at the activity level or at higher levels.

My queries are:

- Why PMBOK is making separate reference to indirect costs
- Secondly, it mentions that indirect costs have to added at activity levels or at higher level. As activity level is the lowest level, it ideally means that these costs can be added at any level you would like. Then why PMBOK has mentioned the same??

Thank you
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Vikas -

It is useful for a PM to think about not just the direct but the indirect costs as the latter might be ignored and could result in a cost overrun due to poor planning later on.

As far as where indirect costs can be added, the distinction is important as direct costs are usually added to the work package or even activity level whereas indirect costs are often added at a higher level in the WBS.

Makes perfect sense now, thanks Kiron!!

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