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
Shortage of high-quality data threatening the AI boom
And other fundamental issues highlighted by the Open Data Institute.
Data centres top the list of growth opportunities
In robust, yet heterogenous world BACS market.
Increased funding for BSR announced
Within plans for next generation of new towns.
New Towns Taskforce interim policy statement
With initial reactions to the 6 month policy update.
Heritage, industry and slavery
Interpretation must tell the story accurately.
PM announces Building safety and fire move to MHCLG
Following recommendations of the Grenfell Inquiry report.
Conserving the ruins of a great Elizabethan country house.
BSRIA European air conditioning market update 2024
Highs, lows and discrepancy rates in the annual demand.
50 years celebrating the ECA Apprenticeship Awards
As SMEs say the 10 years of the Apprenticeship Levy has failed them.
Nominations sought for CIOB awards
Celebrating construction excellence in Ireland and Northern Ireland.
EPC consultation in context: NCM, SAP, SBEM and HEM
One week to respond to the consultation on reforms to the Energy Performance of Buildings framework.
CIAT Celebrates 60 years of Architectural Technology
Find out more #CIAT60 social media takeover.
The BPF urges Chancellor for additional BSR resources
To remove barriers and bottlenecks which delay projects.
Flexibility over requirements to boost apprentice numbers
English, maths and minimumun duration requirements reduced for a 10,000 gain.
A long term view on European heating markets
BSRIA HVAC 2032 Study.
Humidity resilience strategies for home design
Frequency of extreme humidity events is increasing.
National Apprenticeship Week 2025
Skills for life : 10-16 February