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7 - PROJECT COST MANAGEMENT

Figure 7-8 illustrates the various components of the project budget and cost baseline. Activity cost estimates
for the various project activities along with any contingency reserves (Section 7.2.2.6) for these activities are
aggregated into their associated work package costs. The work package cost estimates, along with any contingency
reserves estimated for the work packages, are aggregated into control accounts. The summation of the control
accounts make up the cost baseline. Since the cost estimates that make up the cost baseline are directly tied to the
schedule activities, this enables a time-phased view of the cost baseline, which is typically displayed in the form of
an S-curve, as is illustrated in Figure 7-9.

Management reserves (Section 7.2.2.6) are added to the cost baseline to produce the project budget. As changes
warranting the use of management reserves arise, the change control process is used to obtain approval to move
the applicable management reserve funds into the cost baseline.
7

Project Management
Budget Reserve
Cost Control Contingency
Baseline Accounts Reserve
Work Package Activity
Cost Estimates Contingency Reserve
Activity Cost
Estimates
Total Amount

Project Budget Component

Figure 7-8. Project Budget components

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