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7 - PROJECT COST MANAGEMENT

7.3.2.2 Reserve Analysis

A software project budget is based on the sum of estimates for all identified work activities plus an additional reserve
for work that will potentially emerge. During the project, reserved budget is either applied to meet contingencies or
preserved as surplus or profit. Ideally, as a project progresses and the risks and uncertainties are resolved, the amount
of reserve needed is reduced to zero by the end of a project. When charted over time, the amount of reserve needed
should resemble a cone (the “cone of uncertainty,” large at the beginning of the project and narrowing to zero by
the end of the project). The reserve may be divided between the amount that the project manager can use directly
(contingency reserve) and the management reserve, which will require authorization to be applied to the project.

7.3.2.3 Expert Judgment

See Section 7.3.2.3 of the PMBOK Guide.
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7.3.2.4 Historical Relationships

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See Section 7.3.2.4 of the PMBOK Guide.

7.3.2.5 Funding Limit Reconciliation

See Section 7.3.2.5 of the PMBOK Guide.
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7.3.3 Determine Budget: Outputs

The outputs for determining budget in Section 7.3.1 of the PMBOK Guide (7.3.3.1 through 7.3.3.3) are
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applicable to determining the budget for software projects.

7.3.3.1 Cost Baseline

See Section 7.3.3.1 of the PMBOK Guide.
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7.3.3.2 Project Funding Requirements

See Section 7.3.3.2 of the PMBOK Guide.
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7.3.3.3 Project Documents Updates

See Section 7.3.3.3 of the PMBOK Guide.
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7.4 Control Costs

The inputs, tools and techniques, and outputs for controlling costs in Section 7.4 of the PMBOK Guide are
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applicable to controlling costs of software projects, with the following clarifications.

134 ©2013 Project Management Institute. Software Extension to the PMBOK Guide Fifth Edition
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