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Question
Consider the following statements regarding costs associated with project: 
1. Direct costs increase with time. 
2. Direct costs are normal costs that can be assigned directly to a specific work package or project activity. 
3. Crashing activities increase direct costs. 
Which of the above statements are correct?
A.
1 and 2 only
B.
1 and 3 only
C.
2 and 3 only
D.
1, 2 and 3
Answer ( Option C)

2 and 3 only

Solution

Direct costs are expenses that can be directly attributed to specific project activities or work packages, such as labor, materials, and equipment. These costs typically increase when additional resources are allocated to accelerate project completion, a process known as crashing. Crashing involves adding more resources to critical path tasks to shorten the project duration, which in turn raises direct costs due to overtime, expedited shipping, or additional labor. Direct costs do not inherently increase with time; they are more directly influenced by the level of activity and resource allocation.

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