in conventional definition, the word budget is the total amount of money allocated for a particular project. building a budget is the responsibility of the team members or accountants depending on the complexity of the budget and project. there are many project management tools used to determine the budget of a particular project and one of them is cost aggregation.
this is achieved by the summation of the lower-level cost estimates that are associated with different work packages within the work breakdown structure. the main benefit of cost aggregation is that it allows the project management team to see scheduled spending for every time period. this will allow project managers to see the activities as well as the corresponding costs the main output of cost aggregate is the determination of the cost-performance baseline. doing cost aggregation is very important because it allows the project manager to control the use of cost at the working level.
for pmp certification purposes, you should know that when building a budget, you need expert judgment in the form of team members and perhaps even finance folks, depending on the size and complexity of the budget. in some industries, you can use historical relationships to validate the budget curve. here, you can see activities and costs for the playground installation for a childcare center. the pmbok guide defines reserve and contingency reserve, but not management reserve. budget within the cost baseline or the performance measurement baseline that is allocated for identified risks that are accepted and for which contingent or mitigating responses are developed. a provision in the project management plan to mitigate cost and/or schedule risk. contingency reserve is used to ensure that the project doesn’t overrun the available funding.
using a childcare center example, assume that you set aside 10% of the budget for risk management. for example, say the plumbing contractor at the childcare center put in 20 feet of pvc pipe, and then the carpenter put up the drywall and painted everything only to discover a hairline crack in the pipe that was leaking. management reserve is not part of the baseline, but it is part of the funding requirements. you might want to apply it evenly throughout the project, or assign 10% in the concept phase, 20% in the planning phase, 60% in the construction phase, and the remaining 10% at walk-through. usually, it necessitates extending the schedule to account for limited funding although sometimes funding must be spent by a certain date lest it be lost – and this might call for schedule acceleration. for example, organizations that do similar projects and use a defined lifecycle can tell you what percent of the budget should be spent in each lifecycle phase. whether it’s to pass that big test, qualify for that big promotion or even master that cooking technique; people who rely on dummies, rely on it to learn the critical skills and relevant information necessary for success.
cost aggregation is defined as summing the cost for the individual work package to control the financial account up to the project level. this is achieved by aggregating the individual cost estimates by work packages in accordance with the wbs. the work package cost estimates are then aggregated for the higher cost aggregation is simply summing the costs for each work package to the control account up to the project level. you can aggregate this, funding limit reconciliation pmp, funding limit reconciliation pmp, reserve analysis pmp, cost aggregation example, what is cost aggregation.
cost aggregation is the process of taking the individual estimates for each of the activities and aggregating upward to work package level, then rolling these estimates up to high level, sub-deliverable level, and deliverable level, in order to arrive at a bottom-up estimate for portions of the project or the entire so cost aggregation is a step taken during bottoms up estimating. when you identify the costs during the bottoms up method you aggregate them to come up with summing the ower-level cost estimates associated with the various work packages for a given level within the project’s wbs or for a given cost control account. cost aggregation is thus a minute of the costs for each work package up to the control point and then upwards to the project level. you will be able to, cost aggregation vs bottom-up estimating, bottom-up estimating pmp, aggregate cost accounting, aggregate cost formula, a cost of aggregation is that quizlet, aggregate cost per ton, cost baseline, all of the costs can be assembled into a, aggregation meaning, the three most commonly used methods of cost estimation include all of the following except.
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