Meaning
Expenditures associated with bringing a new facility or system into operation are not always directly tied to the physical installation of hardware. An indirect commissioning cost includes items like specialized staff training, safety audits and the temporary loss of production during the testing phase. These expenses are necessary to ensure that the new equipment meets all operational and regulatory requirements.
They do not include the purchase price of the machinery or the direct wages of the installation crew.
Startup Overhead
Measuring the total investment for a project requires accounting for these hidden fees alongside the purchase price. Every indirect commissioning cost contributes to the total cost of ownership for a new production line. Ignoring these figures leads to budget overruns and inaccurate return on investment calculations.
These costs are often capitalized as part of the asset value if they are essential for the equipment to reach its working state.
Validation Expense
Testing protocols require time and materials that do not result in salable products. The indirect commissioning cost covers the waste generated during the calibration of high precision machinery. This phase is essential for verifying that the equipment can hit its target yield.
Transition Planning
Allocating funds for these expenses early in the project prevents delays when the hardware is ready but the staff is not. An indirect commissioning cost is often larger for highly complex or regulated manufacturing processes.
