Direct vs. Indirect Costs
- Direct Costs: those that are allocable (attributable) to a contract, regardless of whether they can be billed to the client or not.
- Unbillable costs are those that cannot be invoiced to the client based on specific contract clauses or clients’ regulations (i.e. project expenses incurred after the POP, salaries in excess of what the client allows, etc.)
- Indirect Costs: those that are not allocable (attributable) to a contract, but benefit the Company, Division, or Department as a whole.
Indirects as Cost / Indirects as Revenue
- Cost-Benefit Relation → Indirect Costs associated with certain Direct Costs can be charged as Revenue
- Negotiated Indirect Cost Rate Agreement (NICRA)
Applying the rates
