• Contract in this context refer to the contract which is introduced into the project by the process Develop Project Charter. Normally the parameter Contract is applicable if the project is executed as project of the seller which therefore has to compute the contracted costs into its cost baseline.
• The "Management contingency reserves are not part of the project cost baseline, but are included n the budget of the project" (comp. PMBOK3, p. 169). Hence the project manager can only activate these reserves if he documents that the defined cost baseline has been hurt by increasing the budget retroactively.
(4.2) Cost Budgeting
(4.2.1) Process Input
... generated by predecessor processes
- Project Scope Statement
- Work Breakdown Structure
- WBS Dictionary
- Activity Cost Estimates
- Activity Cost Estimate Supporting Detail
- generated by: Cost Estimating
- Project Schedule
- generated by: Schedule Development
- Resource Calendars
- generated by: Activity Resource Estimating
- Cost Management Plan
- generated/updated by: Cost Estimating
... introduced by external units
- introduced by: Develop Project Charter
(4.2.2) Process Definition
Cost Budgeting is the process for "aggregating the estimated costs of individual activities or work packages to establish a cost baseline" (comp. PMBOK3, p. 157): it has to "[...] to establish a total cost baseline for measuring project performance" by "[...] aggregating the estimated costs of individual schedule activities or work packages" (comp. PMBOK3, p. 167).
- Part of the Planning Process Group
- Child Process of Develop Project Management Plan
- Member of Knowledge Area Project Cost Management
The subject Cost operates on the base of other cost concerning concepts
(4.2.3) Tools and Techniques
PMBOK Mentioned Methods
- Cost aggregation is the accumulation of single costs following the structure of the WBS (and the distribution of payments with respect to the schedule base line)
- Reserve analysis is the reasonable expansion of the costs by management contingency reserves for being able to handle unknown unknowns: "managemt contingency reserves are budgets reserved for unplanned, but potentially required, changes to project scope and cost".
- Parametric estimating computes the costs by formulars which operates on more or less unsure values of smaller (WBS) units.
- Funding limit reconciliation is the act of comparing and adjusting the funding limits and the estimated costs by refining the scope, rescheduling the activities and so on.
(comp. PMBOK3, p. 169)
Open Source Tools
(4.2.4) Process Output
- The Cost Baseline which becomes "a component of the project management plan" is "a time-phased budget that is used as a basis against which to measure, monitor, and control overall cost performance on the project".
- Th Project Funding Requirements are planned limitations being derived from the cost baseline
- Updates of the Cost Management Plan become nescessary if the real work evokes changes of the rules how to manage the costs.
- Requested Changes may be evoked for example by the funding limit reconciliation.
(comp. PMBOK3, pp. 170f)