Tools and Techniques for Cost Budgeting

Tools and Techniques	Explanation of Use
cost aggregation	Cost aggregation involves totaling the cost estimates for the activities in each work package, based on the Work Breakdown Structure (WBS). The WBS indicates how costs should be grouped by work packages and components. Project managers use cost aggregation to determine total costs for deliverables and for an entire project. The final sum of the cost estimates is then used for the cost baseline.
reserve analysis	Reserve analysis helps project managers determine a project's contingency reserves. Contingency reserves are amounts of money set aside for unplanned changes to costs; they are part of the total budget, but they are not part of the cost baseline. The total budget is the approved cost estimate for the entire project. The cost baseline is a tool project managers use to monitor and control project expenditures.
parametric estimating	Parametric estimating is a technique that uses a statistical relationship between historical data and other variables to calculate an estimate. Project managers use parametric estimating to predict total project costs.
funding limit reconciliation	Project managers use funding limit reconciliation to reconcile the expenditure of project funds with the funding limits set by the customer. Reconciliation necessitates the revision of project schedules to regulate expenditures; this in turn impacts the allocation of resources. When using funding limit reconciliation, project managers may have to repeatedly conduct a reconciliation, update the schedule, and then conduct a new reconciliation. The result of these planning iterations is a cost baseline.