Cost Items and Cost Elements
The building block of the cost breakdown structure is the cost item (or task or line item in other terminology). A cost item represents an identifiable achievement or deliverable, such as a piece of work or a particular investment return.
Cost items in turn are made up of one or more cost elements. A cost element is the smallest unit of cost that can be independently described. Examples of cost elements might be a number of labor hours or a subcontract.
Cost Item: Testing of new product
- 100 hours of engineering labor
- 200 hours of technician labor
- Test equipment purchases
- Rental of test facilities
Cost elements are not shown on the cost breakdown structure, but are created as part of a cost item during the data input process. A single cost item can contain up to 256 cost elements
Cost elements may in turn be broken down into sub-elements by defining a cost allocation system.