In Economics Sunk Cost are those cost which has been spend and cannot be recovered. In Project Management area, Sunk cost term refer to cost that has already been incurred and has not produced any value for the project.
For example, you buy a Bike for $20000. You can re-sale you bike but you may not get the original price. That Original Price is Sunk cost.
From project management prospective let us take a practical example.
You decided to hire a supplier for your project and paid some advance money to get started. Due to delay or performance issue you decided to drop the supplier in 10 days. You went on to hire a new supplier for your project. The money that you spent on first supplier is Sunk Cost as this money cannot be recovered and it has been already spent.
