Sunk costs

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Project appraisal.

Sunk costs are expenditure which has already taken place, or to which an organisation is already irrevocably committed.

A sunk cost is one which cannot be recovered or reversed.

Sunk costs are irrelevant to project appraisal: "Sunk costs don't count."

A common mistake in project appraisal and analysis is the inclusion - in error - of sunk costs in the analysis.

See also