3 Outputs Of Determine The Budget For Projects
In my previous articles, I have looked at some of the major tools and techniques that can be used when organizations are trying to determine the budget for projects. In this article, I want to look at some of the major outputs to Determine Budget for projects. Follow me as we look at this together in this article.
#1 Cost Baseline
The cost baseline is the approved version of the time-phased project budget, excluding any management reserves, which can only be changed through formal change control procedures. It is used as a basis for comparison to actual results.
The cost baseline is developed as a summation of the approved budget for different schedule activities.
Cost estimates for the various activities, along with any contingency reserves for these activities, are aggregated into the associated work package costs. The work package cost estimates, along with any contingency reserves estimated for the work packages, are aggregated into control accounts.
The summation of the control accounts makes up the cost baseline. Since the cost estimates that make up the cost baselines are directly tied to the schedule activities, this enables a time-phased view of the cost baseline which is typically displayed in the form of an S-curve. For projects that use earned value management, the cost baseline is referred to as the performance measurement baseline.
#2 Project Funding Requirements
Total funding requirements and periodic funding requirements are derived from the cost baseline. The cost baseline will include projected expenditures plus anticipated liabilities. Funding often occurs in incremental amounts, and may not be evenly distributed. The total fund required is those included in the cost baseline plus management reserves. If any, funding requirements may include the source(s) of the funding.
#3 Project Documents Updates
Project documents that may be updated as part of determining the budget for projects include:
Cost estimates: Cost estimates are updated to record any additional requirements.
Project schedule: Established costs for each activity may be recorded as part of the project schedule.
Risk register: New risks identified during this process are recorded in the risk register and managed using the risk management process.
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