Cost baseline

The approved, time phased budget a project is measured against, made up of the priced work packages plus their contingency reserve, and excluding management reserve.

The cost baseline is the number a project is held to, not the number the organisation has set aside. Priced work packages plus contingency reserve make the baseline; adding management reserve on top gives the total budget, which is why the two figures rarely match and why quoting the wrong one starts an argument. Every cost variance and every performance index is calculated against the baseline, so changing it resets the record of how the project has performed so far. That is the reason a baseline change is a governance act with a name attached rather than a spreadsheet edit.

See also

Contingency reserve

Money held inside the cost baseline, or time held inside the schedule baseline, for risks already identified, assessed and priced, and drawn on by the project manager as they occur.

Term
Management reserve

Money held above the cost baseline for exposure nobody identified during planning, released by the sponsor or the funding body and never by the project manager.

Term
Planned value

The budgeted cost of the work the baseline scheduled to be complete by a given date. Planned value = budget at completion × planned percent complete.

Term

Where this comes up

Contingency reserve vs management reserve: what sits inside the baseline, and who releases it

Contingency reserve sits inside the cost baseline, for risks already named and priced. Management reserve sits above it, for the ones nobody named. Level and authority, not size.

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