The difference between project budget and cost baseline This is a measure of how cost-effective your project is. The cost baseline is an important facet of calculating the Cost Index, according to the Project Management Institute, which is measured by the actual costs divided by the cost estimate. Once this detailed budget is approved by management, it is called the cost baseline. Resources can include employees, contractors, subcontractors, equipment, and other assets used to meet requirements.Ī cost baseline starts with an initial estimated budget. Resources: People and materials required to complete tasks, including those within an organization and external vendor or supplier groups.Project schedule and scope: All work that needs to be completed within a specific time frame to produce deliverables defined in a statement of work or contract.The cost baseline incorporates all aspects of the project including: This baseline represents the approved budget and provides a basis for comparing actual costs to planned costs. You will often find cost estimation illustrated with an S-curve to show how costs will be incurred over time. They are also called time-phased budgets because they are budgets that are linked to a specific time period. What is a cost baseline in project management?Ĭost baselines, or cost performance baselines, are projected budgets that predict the overall cost of a project in a particular period.
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