Cost Baseline and Time-Phased Budget

Estimate, budget and baseline are related but different

The estimate predicts cost. The budget authorizes funding or spending. The cost baseline allocates approved budget to work and time. Organizations may also hold management reserve outside the performance baseline for unknown or higher-level risks.

Build the baseline

1. Confirm approved scope and work packages.
2. Assign budget to responsible owners.
3. Align budget with the project schedule.
4. Define objective progress measures.
5. Document contingency and reserve treatment.
6. Approve and freeze the baseline version.

Time phasing matters

A project can be within total budget yet experience a cash shortfall or misleading variance because costs occur earlier or later than expected. Link planned value to the schedule and expected payment timing.

Control changes

Correct errors and incorporate authorized scope changes through a documented process. Do not move baseline budget simply to erase poor performance. Preserve both the current baseline and its change history.