What is the sum of direct and indirect costs allocable to a contract called?

The sum of direct and indirect costs allocable to a contract is referred to as Total Cost. This term encompasses all expenses that can be directly attributed to the fulfillment of a contract, including direct costs such as labor and materials, as well as indirect costs like overhead and general administrative expenses.

Understanding Total Cost is critical in contract management and negotiation, as it provides a comprehensive view of all financial resources required to complete a project. This concept is important in budgeting, pricing, and ensuring both the contractor and the client have a clear understanding of the financial implications of the contract.

In contrast, Contract Value typically refers to the overall worth assigned to a contract, which may include factors beyond just the summed costs. Estimated Cost implies a projected figure before actual expenditures are assessed. Cost Proposal generally pertains to the document outlining the costs a contractor plans to charge, which can differ from the actual Total Cost calculated once all costs are accounted for. Thus, recognizing Total Cost is essential for accurate financial planning and contract execution.