What Are Variable Costs vs Fixed Costs in PMP Estimating?
Understand variable costs that vary with project work levels versus fixed costs, essential for precise estimating, budgeting, and control in predictive project management and PMP certification exams.
Question
Which type of cost changes depending on the level of project work?
A. Fixed cost
B. Variable cost
C. Direct cost
Answer
B. Variable cost
Explanation
Variable costs fluctuate directly with the volume or level of project work performed, such as materials consumed proportionally to output quantity, labor hours tied to activity duration, or utilities scaling with production levels, making them predictable through parametric models or historical rates during cost estimating in predictive projects. In contrast, fixed costs remain constant regardless of work volume (e.g., facility rental or software licenses), while direct costs trace specifically to the project but can be either fixed or variable (e.g., project-specific salaries). This classification supports accurate budgeting, variance analysis in Control Costs, and decisions on scaling work packages without proportional expense spikes.