What You Need to Know to Determine Budget for the PMP Certification Exam
Your budget is the authorized funding for your project. For the PMP Certification Exam, you will need to know the definition of this process and be familiar with the definition of budget and budget at completion.
Determine Budget. Aggregating the estimated costs of individual activities or work packages to establish an authorized cost baseline.
Budget. The approved estimate for the project or any work breakdown structure component or any schedule activity.
Budget at completion (BAC). The sum of all the budgets established for the work to be performed.
To formulate the budget, you spread cost estimates across the schedule. This gives you a time-phased spending curve, often called an S-curve. It starts with looking at how scope, schedule, and cost relate.
You need numerous project documents and artifacts to create a reliable budget. You will want to apply the organization’s budgeting policies and tools to keep the information organized.
The scope baseline provides the obvious, which is the WBS and WBS dictionary that defines the detailed work for the project. However, the scope statement can have some very useful information. Remember that the scope statement documents project constraints. Many times, funding limitations are based on fiscal year budgets.
For example, the project might have an overall cost estimate of 2.5 million, but only 1 million is available the first year, 1 million the second year, and the balance in the third year. Work done for the government often has funding limitations that restrict the expenditures of funds. You need to compare this information with information from the schedule and the cost estimates to develop an accurate budget.
Schedule artifacts include the project schedule, which has information on the planned start and finish dates for elements of the project scope. At the most detailed, you can see start and finish dates for activities. You can also see the dates for work packages and even control accounts. This can help you aggregate costs by work period.
You should also look at the resource calendars to see when people are available and when they are assigned to work. If you have to spread out work to accommodate funding limitations, you need to determine whether resources are available as needed.
The cost management plan, cost estimates, and the basis of estimates are applied to the work packages and the schedule to develop the funding needs over time. You should look at agreements and contracts to determine when payment for goods and services are due. Review the risk register to determine how to aggregate risk response costs and to incorporate contingency reserves over time.