Determine Budget Process Outputs

aggregation tool and technique) by time periods. This is also known as the project's time-phased budget. Most projects span some length of time, and most organizations time the funding with the project. In other words, you won't get all the funds for the project at the beginning of the project; they'll likely be disbursed over time. The cost performance baseline provides the basis for measurement, over time, of the expected cash flows (or funding disbursements) against the requirements.

Cost performance baselines can be displayed graphically, with time increments on one axis and dollars expended on the other axis, as shown in Figure 5.1. The costs shown on this graph are cumulative costs, meaning that what you spent this period is added to what was spent last period and then charted. Many variations of this graph exist showing dollars budgeted against dollars expended to date and so on. Cost budgets can be displayed using this type of graph as well, by plotting the sum of the estimated costs excepted per period.

FIGURE 5.1 Cost performance baseline

FIGURE 5.1 Cost performance baseline

The cost performance baseline should contain the costs for all of the expected work on the project. You would have identified these costs in the Estimate Costs process. You'll find most projects' largest expense is resource costs (as in labor costs). In the case of projects where you're purchasing the final product, the purchase price is the largest cost.

Exam Spotlight

For the exam, remember that cost performance baselines are displayed as an S curve. The reason for this is that project spending starts out slowly, gradually increases over the project's life until it reaches a peak, and then tapers off again as the project wraps up. Large projects are difficult to graph in this manner because the timescale isn't wide enough to accurately show fluctuations in spending. There are other methods that more accurately graph costs that you'll look at in the Cost Control process.

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Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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