6th Edition PMBOK® Guide–Process 7.3 Determine Budget: Inputs

The scope of the project was broken down to the level of work packages with the scope management knowledge area, and each work package was then broken down into a series of activities in the schedule management knowledge area.   In the last process 7.2 Estimate Costs, the cost of each of those activities was estimated.   Now in this process, the cost of each work package is going to be aggregated from the cost of the activities it comprises, and then the total cost of the entire project is going to be aggregated from the cost of the work packages, and this will be the cost baseline against which the performance of the project will be measured going forward.

Let’s discuss the inputs to this process.

7.3.1 Project Management Plan

The components of the overall project management plan that will be inputs to this process are:

  • Cost management plan–an output of process 7.1 Plan Cost Management, this gives guidelines on bow to do all of the other planning processes, including this one.
  • Resources management plan–this provides information on the cost of resources which are needed to estimate the overall project budget.
  • Scope baseline–this consists of three documents:
    • Project scope statement–breaks down the scope from the level of requirements discussed at the initiating process phase of the project, to the level of deliverables that fulfill those requirements
    • WBS (Work Breakdown Structure)–breaks down the scope from the level of deliverables (found in the project scope statement) to the level of work packages
    • WBS Dictionary–this contains information about the work packages related to other constraints (this will be updated with cost estimates as a result of this process) Project Documents Project Documents

Schedule Knowledge Area

  • Basis of estimates–output of process 6.4 Estimate Activity Durations, this may contain assumptions related to the activities which may have a bearing on whether these costs should be included in the budget, particularly if they are indirect costs (costs not necessarily associated solely with the current project)
  • Project schedule–output of process 6.5 Develop Schedule, contains planned start and finish dates for the activities and work packages, which may have a bearing on which calendar period these project costs are to be incurred in.

Cost Knowledge Area

  • Cost estimates–As a result of process 7.2 Estimate Costs, cost estimates for each activity within a work package are aggregated to obtain a cost estimate for each work package,

Risk Knowledge Area

  • Risk register–the risk register (an output of process 11.2 Identify Risks, and updated in every risk management planning process that follows it) contains information on costs for risk responses. Business Documents

These are documents created in the initiating process phase, which are the outputs of processes done by business analysts.

  • Business case–includes the financial success factors for the project
  • Benefits management–what are the benefits of the project on an ongoing basis to the firm?   The benefits management plan may include the target benefits, measured by net present value or return on investment, to give two examples. Agreements

Agreements is the PMI code word for “contracts” between the company and vendors who are contributing resources to be used by the company to do the project, or products which will be incorporated as components of the project. Enterprise Environmental Factors

For large-scale projects that extend multiple years with multiple currencies, it may be necessary to refer to exchange rates, so that any fluctuations in those rates and be considered in the upcoming process 7.3 Develop Budget. Organizational Process Assets

  • Historical information and lessons learned repository from previous similar projects.
  • Existing cost budgeting-related policies and guidelines.
  • Cost budgeting tools
  • Reporting methods (which stakeholders get reports, in what format, and how often)

The next post will cover the tools and techniques of this process.




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