Irrelevant costs in construction
An irrelevant cost is an accounting term used to refer to costs that do not relate to whether or not a particular business decision is made. Irrelevant costs will be incurred regardless of the decision.
By identifying the irrelevant costs in relation to a particular business decision, unnecessary cost information can be removed from the decision making process, leaving only costs that are relevant to the decision (i.e. 'relevant costs' that will be affected depending on which option is selected). Time and effort can be saved by distinguishing between relevant and irrelevant costs when analysing decision options.
Typically, irrelevant costs include:
- Sunk costs: Costs that have already been incurred, and so are independent of any decision that might be made in the future.
- Committed costs: Costs that will be incurred in the future but must be paid regardless of any business decisions.
- Notional/non-cash costs: Depreciation, amortisation, and so on.
[edit] Related articles on Designing Buildings Wiki
Featured articles and news
Cladding remediation programmes, transparency and target date.
National Audit Office issue report on cladding remediation.
HBPT and BEAMS Jubilees. Book review.
Does the first Labour budget deliver for the built environment?
What does the UK Budget mean for electrical contractors?
Mixed response as business pays, are there silver linings?
A brownfield housing boost for Liverpool
A 56 million investment from Homes England now approved.
Fostering a future-ready workforce through collaboration
Collaborative Futures: Competence, Capability and Capacity, published and available for download.
Considerate Constructors Scheme acquires Building A Safer Future
Acquisition defines a new era for safety in construction.
AT Awards evening 2024; the winners and finalists
Recognising professionals with outstanding achievements.
Reactions to the Autumn Budget announcement
And key elements of the quoted budget to rebuild Britain.
Chancellor of the Exchequer delivers Budget
Repairing, fixing, rebuilding, protecting and strengthening.
Expectation management in building design
Interest, management, occupant satisfaction and the performance gap.
Connecting conservation research and practice with IHBC
State of the art heritage research & practice and guidance.
Innovative Silica Safety Toolkit
Receives funding boost in memory of construction visionary.
Gentle density and the current context of planning changes
How should designers deliver it now as it appears in NPPF.
Sustainable Futures. Redefining Retrofit for Net Zero Living
More speakers confirmed for BSRIA Briefing 2024.
Making the most of urban land: Brownfield Passports
Policy paper in brief with industry responses welcomed.
The boundaries and networks of the Magonsæte.