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
British Architectural Sculpture 1851-1951
A rich heritage of decorative and figurative sculpture. Book review.
A programme to tackle the lack of diversity.
Independent Building Control review panel
Five members of the newly established, Grenfell Tower Inquiry recommended, panel appointed.
ECA progress on Welsh Recharging Electrical Skills Charter
Working hard to make progress on the ‘asks’ of the Recharging Electrical Skills Charter at the Senedd in Wales.
A brief history from 1890s to 2020s.
CIOB and CORBON combine forces
To elevate professional standards in Nigeria’s construction industry.
Amendment to the GB Energy Bill welcomed by ECA
Move prevents nationally-owned energy company from investing in solar panels produced by modern slavery.
Gregor Harvie argues that AI is state-sanctioned theft of IP.
Heat pumps, vehicle chargers and heating appliances must be sold with smart functionality.
Experimental AI housing target help for councils
Experimental AI could help councils meet housing targets by digitising records.
New-style degrees set for reformed ARB accreditation
Following the ARB Tomorrow's Architects competency outcomes for Architects.
BSRIA Occupant Wellbeing survey BOW
Occupant satisfaction and wellbeing tool inc. physical environment, indoor facilities, functionality and accessibility.
Preserving, waterproofing and decorating buildings.