PLANNING STAGE (COST) : DETERMINE BUDGET

This is a final process of planning cost whereby after getting all the activity costs estimates from the previous process, you aggregate or in other words you collect all in order to establish the cost baseline.

Below are few inputs to refer:

• Cost management plan (which describes procedures or methods for managing and control the project costs)
• Activity costs estimates (whereby the cost of each activity is aggregated.)
• Basis of estimates (all the supporting details with assumptions that need to be considered when determining the budget)
• Resource calendars (which show type of resource and its availability for the project activity. This may also indicate resource costs over the duration of the project)
• Project schedule (which shows how costs will be incurred in the duration of the project)
• Agreements (which show the agreeable costs relating to the products, services or results that will be provided by suppliers or vendors etc. This may also determine the budget)
• Organizational Process Assets (which explain the historical information as well as the lessons learnt in the process of determining the budget from the previous similar projects. They also provide cost budgeting tools, methods, procedures or guidelines if available)

The process can be done by the following:

• Cost Aggregation whereby through the use of Work Breakdown Structure, the costs are aggregated for the entire project
• Using Experts like Consultants, Professionals, Stakeholders and other units within the organization who can determine the budget basing on their experience, skills and knowledge.
• Using historical relationships basing on the parameters from the prior similar projects which create mathematical model for total cost’s prediction.
• Funding limit reconciliation whereby funds to be used should be committed for the project.

Cost Baseline as an output will be developed as the summation of the approved budget for the project activities. 

Note that:

• Project funding requirements as well as sources of funding will be derived from the cost baseline. 
• Funding process normally is not provided continuously but in phases (steps) during the project life cycle. 

References:

PMI (2013). A Guide to the Project Management Book of Knowledge (PMBOK Guide 5^th Ed.) USA, Project Management Institute

http://www.eldersrealestate.com.au/2017/02/06/what-are-the-hidden-costs-of-buying-a-home/

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