The budget baseline is a time-staged project budget that must be approved by the project sponsor and, if necessary, by key stakeholders. In other words, we can call the budget baseline the total budget expected to be spent on a project.
The budget baseline is important because it helps ensure that all project costs are accounted for and that the project stays on track financially. The budget baseline is created during the project planning phase and is updated as the project progresses.
A key part of creating a budget baseline is forecasting the project costs. This involves estimating the cost of each task and then summing the totals to get the overall project cost. The budget baseline should be approved by the project sponsor and, if necessary, by key stakeholders. This will help ensure that everyone is on the same page with respect to the project budget.
It is a project artifact and considered as a baseline artifact as well. It is likely to be used in the activities of the following performance domains:
The budget baseline is obtained mainly by collecting cost estimates for activities previously achieved plus the management reserves determined for the project. It forms a component of the project management plan. The budget baseline is used to measure the performance of the project throughout the project. Costs such as maintenance costs that will occur after the project is completed are not included in this baseline.
When creating a budget for your project, it's important to establish a baseline that can be used for comparison later on. This will help you track your project's expenses and make sure they stay within the allotted budget. Just like any other project management baselines, the budget baseline should be aimed at providing a realistic view of the project's expenses.
A budget baseline is a critical part of effective risk management in projects. By tracking actual costs against the budget baseline, you can quickly identify any deviations from expected spending and take appropriate action. The budget baseline is also useful for other aspects of project management, such as creating the risk management plan, identifying risks, conducting a qualitative risk analysis, and optimizing risk responses.
Budget baseline is directly used for measurement and control purposes as a part of the measurement performance domain since it is needed to be used to compare actual results to estimated ones. It also provides information for tailoring processes about acquiring resources or conducting procurements.
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