Question

Sometimes very high ________ costs are recognized before a project begins and reducing these costs through shorter project durations becomes a high priority.

Answer 1

Answer:

Overhead costs

Explanation:

When high overhead costs are recognised before project starts there will be a need to manage them. Since overhead cost increase as duration of project increases, reduction in project duration will go a long way in reducing cost incurred.

Overhead costs can include wages, rent, utility bills, maintenance costs and so on. They can also be reduced when costs that are not adding value is recognised.

Answer 2

Answer:

D) overhead

Explanation:

Overhead costs are the fixed costs or indirect costs or a project. This means that they are not directly related to the production process or the delivery process. Overhead costs are divided into:

• manufacturing: machinery and equipment, supervisors' salaries, utilities, etc.
• administrative: rent, advertisement, equipment, etc.  

Depending on the project's scope and required tasks, projects can be crashed to reduce both direct and indirect (overhead) costs. Shorter project schedules can result in lower overhead costs, even if the direct costs are not affected, e.g. less rent, less supervisors, shorter equipment leasing times, etc.