Cost Types in Project Management – Definition and Meaning
Cost types are categories used to classify costs according to their original nature or purpose, regardless of where they occurred within the company. They are used in accounting and project management to support budgeting, cost planning, and cost control by enabling structured recording and analysis of expenditures. Typical cost types group expenses, for example, by personnel costs, material costs, travel expenses, external services, or depreciation.
Example, best practice, and further information on the term
In event planning (event management project), for example, typical cost types could be “Personnel (Organization),” “Rent (Location),” “Catering,” “Marketing & Advertising,” and “Technology.” A proven best practice is to clearly define the relevant cost types for a project or organization (often within a cost type plan) and consistently allocate and track all expenses accordingly. This aligns with cost structuring in cost management according to PMBOK and supports agile principles of cost transparency. Clear cost type accounting helps to analyze and control expenses in detail and to identify budget overruns at an early stage.