Direct Costs
EVM Terms
Reviewed by forProject Technology - updated Sep 2026
Quick definition: Direct Costs are costs that can be specifically identified with a particular contract or project and are charged to it directly — for example materials, labor, subcontractor charges, or other direct costs such as travel.
Unlike Indirect Costs, which are shared across multiple contracts or the business as a whole, Direct Costs are traceable to one specific cost objective. Material purchased for a contract, or the wages of employees working directly on it, are common examples. Direct and indirect costs together make up the Elements of Cost.
Why it matters
Correctly separating direct from indirect costs matters for accurate cost estimating, billing, and EVM reporting, since direct costs are typically charged straight to a Control Account. Misclassifying a cost can distort a project's reported cost performance.
Also known as
N/A
Used in
Elements of Cost; Control Account Plan development
FAQ
What's a simple example of a Direct Cost?
Material purchased specifically for a contract, or the wages of an employee working directly on that contract, are both classic examples.
Are Direct Costs the same as Applied Direct Costs?
They're related but not identical — Applied Direct Costs specifically refers to direct costs recognized in the same period the associated resource is used, which is one way of recording direct costs.
Definition maintained by forProject Technology.
© 2026 forProject Technology, Inc.
© 2026 forProject Technology, Inc.
