HKSM
Budget
An approved cost estimate that applies to the entire project, a specific WBS component, or an individual scheduled activity.
Key Points
- Represents the authorized funding baseline used to plan, measure, and control costs.
- May be set at multiple levels: project, control account, work package, or activity.
- Often time-phased to support cash flow management and earned value analysis.
- Changes require formal approval through integrated change control.
Example
On a construction project, the manager aggregates the approved costs for design, permits, labor, materials, equipment, and contingency to establish a project budget of $5.2M. The electrical work package has its own approved budget of $420,000, which is tracked monthly against actual costs.
PMP Example Question
Which term best describes the authorized cost estimate for the entire project or for a specific WBS component or scheduled activity?
- Bottom-up estimate
- Budget
- Cost baseline
- Earned value
Correct Answer: B — Budget
Explanation: A budget is the approved cost estimate assigned to the project as a whole or to any WBS element or activity.
