Price Versus Cost

So very often, I encounter project managers who are not even sure about the differences between price and cost of a project. Without understanding this basic concept the project could be lost. In basic terms, price is the amount of money that a client or stakeholder is willing to give the project manager in order to receive something from him or her. As a provider, this can either in the form of a product or a service.

Cost, on the other hand, is the amount of resources (e.g., money, staff, training, materials, and equipment) that are consumed in order to produce the delivered products or services that the project has as its result. What then is the relationship between cost and price? Are we satisfied if we are able to make a reasonable profit on what we do for our stakeholders? Are we satisfied if the cost of doing a project is less, by some accepted percentage, than the selling price?

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