Direct Costs - Overview

**Direct Costs are a crucial component of financial management. They track project expenses that do not come from a formal Purchase Order (PO) or Subcontract (SC). Essentially, these are costs your company incurs directly on a project without a prior contractual agreement.

The Direct Costs tool in Procore helps you stay on budget by tracking all project expenses that are not tied to a formal contract or purchase order. This gives you a complete financial picture of your project, allowing you to manage all costs impacting your budget effectively.

This tool helps project teams get a complete picture of spending, beyond just the big commitments.

Key Features of Direct Costs in Procore:

• **Non-Commitment Focused: Designed specifically for costs that are not tied to a PO or subcontract.

• **Flexible Expense Entry: You can record various types of direct costs:

  • **Invoices: For one-time purchases from vendors that do not have a contract. For example, small materials and office supplies.

  • **Expenses: For internal costs like equipment rentals, project-specific utility bills, or employee travel.

  • **Payroll: To allocate your own workforce's labor costs directly to a specific project budget line item.

• **Budget Integration: Once a direct cost is approved, its amount automatically appears in the "Direct Costs" column of your project's **Budget tool, offering real-time cost visibility.

• **Owner Invoicing Capability: Approved direct costs can be automatically included in the owner's invoice (Schedule of Values or SOV) if they fall within the billing period, which streamlines your billing process.

• **Detailed Tracking: Capture granular details like vendor, description, budget code, quantities, dates (received, paid), and attach supporting documents like receipts.

• **Status Management: Direct costs move through various statuses allowing for internal approval workflows. For example, Draft, Pending and Approved.