Budget Baseline

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.

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. 

Creating a budget is the primary action to control, monitor, and manage project expenses. Similar to any other project management baselines, the budget baseline is aimed to be used for comparing actual expenditures against the estimated ones.

The budget baseline is almost directly linked with risk management in projects. Because cost is a natural source of risk for any project. Proper risk management should always use a budget baseline to track actual costs to figure out if anything is out of order. It is useful while creating the risk management plan, risk identification, 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.

See also: