How many ways are there to say "Cost"?
Certainly, more than one!
When "they" ask: 'How do YOU manage cost?", your answer is: 'It's complicated' because there are so many varieties of 'cost'.
Project managers certainly have at least this list:
- Estimated cost (of course, an estimate has to be made in the context of a plan: scope and schedule and resource plans)
- Baseline cost (estimated cost at the beginning of a planned period)
- Re-baseline (Sunk cost, plus a "new" estimate for the ensuing period)
- Cost variance (the difference or departure of actual cost from the baseline)
- Planned value (baseline cost input to the project, over time, allocated to planned functional or feature achievement)
- Earned value (as a proportion of Planned Value actually completed)
- Cost performance Index (as a 'cost efficiency' measure of how well cost input earns value)
- Actual cost (measured at a point in time, regardless of achievement)
- Sunk cost (aka actual cost incurred)
- Direct cost (costs attributed to this project, and this project only)
- Indirect or overhead cost (common costs shared across many projects, proportionally)
- Labor cost (a component of direct cost; does not include overhead labor)
- Standard cost (used by service organizations and Time & Materials proposals to 'fix' or standardize the "labor cost by category" to a single dollar figure within a range of costs for that labor category. *)
- Material and contracted services cost
- Throughput cost (only that part of direct cost required to actually construct value outcomes; often used in combination with Standard Cost)
- Construction cost (aka Throughput cost, but sometimes also total of direct costs)
- Incentive cost (paid as direct payments to individuals and contractors for specific performance achievements)
Finance, accounting, and business management have a few more:
- General and Administrative cost (G&A), mostly for "top-level headquarters" expenses
- Marginal cost (cost of one more item that does not require more of 'something else' to enable)
- Cost margin (difference between cost of sales and revenue associated with those costs)
- Discounted cost (cost after a reserve for risk, usually calculated over time)
- Depreciated cost (cost accumulated over time, as different from cost in the moment)
- Cost of sales (direct cost to generate sales)
- Activity Based Costing [ABC] Overhead costs allocated to specific activity, plus direct costs of the activity.
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(*) Standard Cost: As an example, for Labor Category 1, the salaries may range from $1 to $10, but the Standard Cost for this category may be $7 because most in this category have salaries toward the upper end. Standard Cost is not necessarily an arithmetic average within the category; it is a weighted average
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