What Is Main Output of Determine Budget Process in PMP?
Learn the primary output of Determine Budget: the cost baseline, which aggregates estimates into an approved spending plan for monitoring variances and controlling costs in predictive project management and PMP exams.
Question
What is the main output of the Determine Budget process?
A. Cost baseline
B. Activity cost estimates
C. Work breakdown structure
Answer
A. Cost baseline
Explanation
The Determine Budget process in Project Cost Management aggregates the activity cost estimates from the Estimate Costs process, incorporating contingency and management reserves, to establish the authorized time-phased project budget documented as the cost baseline, which serves as the performance measurement reference against actual expenditures throughout the project lifecycle. This output, approved by management and included in the project management plan, excludes management reserves (tracked separately for unknown risks) and enables variance analysis via earned value management during cost control, ensuring funding requirements align with cash flow needs. Distinct from activity cost estimates (which feed into it) and the WBS (a scope tool), the cost baseline provides a stable benchmark for forecasting completion costs and corrective actions in predictive projects.