The PMBOK defines project budget as “the approved estimate for the project or any work breakdown structure (WBS) component or any schedule activity.” Basically it’s the cost of all the units of work that you have planned for in the project scope.
As with scope, the budget is 𝘦𝘴𝘵𝘪𝘮𝘢𝘵𝘦𝘥. Estimates are inherently uncertain and associated with risk. And like scope, the budget will likely evolve from the initial agreed upon estimates.
How is the budget estimated? Looking at the (estimated) scope, project activities get an estimated cost. These costs are aggregated to develop the cost baseline. This cost baseline is then allocated across the project schedule to reflect when the costs are incurred. This is usually managed by the project manager. If there is a sudden change to the budget for a period of time, the work will likely need to be rescheduled.
A project budget will likely include contingency reserve funds in the case of an adverse event (anticipated by a risk analysis). Ultimately, the project budget is the cost baseline, plus the contingency reserve.
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