Cost Baseline
The cost baseline is the approved version of the time-phased project budget, excluding management reserves, used as a reference for measuring and monitoring cost performance.
Explanation
The cost baseline is developed as a summation of the approved budgets for the different schedule activities. It is typically displayed in the form of an S-curve because project expenditures tend to start slowly, accelerate during execution, and then taper off during closing.
The cost baseline includes all authorized budgets, including contingency reserves for identified risks. It does not include management reserves. It is established through the Determine Budget process and can only be changed through the formal integrated change control process.
During project execution, the cost baseline serves as the benchmark against which actual costs are compared. Earned value management uses the cost baseline to calculate planned value and to measure cost and schedule performance. Any significant deviation from the cost baseline may trigger corrective actions or change requests.
Key Points
- •Approved, time-phased project budget excluding management reserves
- •Includes contingency reserves for identified risks
- •Displayed as an S-curve graph
- •Can only be changed through formal change control
Exam Tip
The cost baseline includes contingency reserves but NOT management reserves. It is the benchmark for EVM. Changes to the cost baseline require formal change control.
Frequently Asked Questions
Related Topics
Determine Budget
Determine Budget is the process of aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Project Budget
The project budget is the total authorized funds allocated for the project, composed of the cost baseline plus management reserves.
S-Curve
An S-curve is a graphical display of cumulative costs, labor hours, or other quantities plotted against time, forming a characteristic S-shape.
Control Costs
Control Costs is the process of monitoring the status of the project to update project costs and managing changes to the cost baseline.
Most-studied PMP concepts
High-yield topics our learners drill most before exam day.
Cost Performance Index (CPI)
Cost Performance Index (CPI) is an EVM efficiency metric that measures cost performance as the ratio of earned value to actual cost: CPI = EV / AC.
Schedule Performance Index (SPI)
Schedule Performance Index (SPI) is an EVM efficiency metric that measures schedule performance as the ratio of earned value to planned value: SPI = EV / PV.
Earned Value Management (EVM)
Earned Value Management (EVM) is a methodology that integrates scope, schedule, and cost data to assess project performance and progress objectively.
Burndown Chart
A Burndown Chart is a graphical representation of work remaining versus time in a Sprint or release, showing whether the team is on track to complete the planned work.
Resource Leveling
Resource leveling is a resource optimization technique in which adjustments are made to the project schedule to keep resource usage at or below a defined limit, often resulting in a longer project duration.
Risk Register
The risk register is a project document that records the details of individual project risks, including their identification, analysis results, response plans, and current status.
Stakeholder Mapping
Stakeholder mapping is the visual representation of stakeholder relationships, influence, interest, or other attributes using grids, matrices, or diagrams to support analysis and engagement planning.
Relative Estimation
Relative Estimation is an agile technique where work items are sized in comparison to each other rather than in absolute units like hours or days, providing faster and more accurate estimates.
Power/Influence Grid
The power/influence grid is a stakeholder classification model that groups stakeholders based on their level of authority (power) and their active involvement or ability to affect the project (influence).
Part of
Cost Management
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.