Determine Budget Process

During the estimate costs process, we created a cost estimate for each activity. Here is the process of determining the budget, a process in which these cost estimates are combined and the project budget is created and the cost baseline is revealed.

By using the cost baseline used in this process, the performance of the project can be monitored and the cost control of the project is provided. In addition, another benefit obtained by creating a budget is the combination of cost and time elements. Cost estimates previously made individually are combined in the budget according to time intervals, and periodic budget needs are also laid out.

The fact that the project has a visible, approved and traceable budget is also useful for explaining the project in terms of cost in communication with senior management and the project sponsor.

The process of determining the project budget is a very important process in terms of the final success of the project. It is a very important consideration that the budget is sufficient for the cost of the activities to be carried out when making this determination. However, allocating too much money for the project is also a consideration that should be avoided.

Develop budget process is in the planning process group and it is in the cost management knowledge area. Determine budget process is typically done once or at predefined points in the planning phase of projects. The main outputs that we have at the end of the process is the cost baseline and funding requirements. Cost baseline is simply an approved graphical depiction of cost aggregations of activities related to time intervals. Project funding requirements are derived from the cost baseline and it shows us the predicted expenditures, liabilities, funding sources, and total and periodical requirements of funding.

Inputs of determine budget process

  • Cost estimates: We need to aggregate all individual cost estimates of activities, in order to reach a final budget.
  • Cost management plan: This plan includes a guide to build a budget.
  • Resource management plan: We need to recall the methodology to manage the project resources for this process.
  • Scope baseline
  • Basis of estimates
  • Project schedule
  • Risk register
  • Business case
  • Benefits management plan
  • Agreements
  • Enterprise environmental factors
  • Organizational process assets

Tools & Techniques used in determine budget process

  • Cost aggregation : This is the main method to achieve a final budget. It is very basic and straightforward to use.
  • Reserve analysis: The final budget will include both contingency reserves and management reserves. Therefore a reserve analysis to determine this is a must.
  • Historical information review: Information from the past projects, or former experiences of the organization is helpful.
  • Funding limit reconciliation
  • Financing
  • Expert judgment: Both internal and external budget experts may be included in the project to be used as a tool and technique.
Comments:
1- yturesaf 30.05.2021
At first glance the term budget seems frightening for the finall success of the project. However, as long as i see here it is rather easier to be managed if determined properly at first place.