Project managers rely on a budget to make better decisions regarding different constraints like time, scope and cost so that they can complete the project while satisfying the needs of the stakeholders and also effectively implement the resource allocation.
The project budget is the total amount of resources (money) allocated to meet the goals and objectives of a particular project for a specified period of time. The project budget is very important because it controls and estimates the project cost.
Establishing the overall cost is important in project management. Creating a budget requires a lot of information and these include the cost management plan, scope baseline, activity costs estimate, basis of estimate, project schedule, risk registers, resource calendars, agreements and organizational process assets.
One of the processes used in budget planning is determining the budget. This process involves the aggregation of the estimated costs of different individual tasks or work packaged to an authorized and established cost baseline. The advantage of this process is that it helps determine the cost baseline and the project that needs to be controlled and monitored.
Aside from determining the cost baseline, the other output for this particular project management process is the identification of the project funding requirements and the creation of updates for the project documents.
To determine the budget, it is crucial for this particular process to be conducted alongside the project scheduling process. The steps of these two processes are dependent upon each other thus, it is called the project budgeting process. This process allows the project manager to develop appropriate budget while considering the different cost factors that are associated with the project tasks and the time duration. This is the reason why determining the budget requires different tools and techniques like reviewing historical data, investigating resource information and following project policies.
This term is defined in the 5th edition of the PMBOK.