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Determine Budget Process

Every project has a fixed budget allocated for resources. Project Managers determine the project’s budget by estimating the costs of individual project tasks required to complete the project. The determine budget process assists project managers in finding the cost aggregate of project activities. Determine budget process is a crucial project management process as it helps establish the project’s overall cost.

Importance of Determine Budget Process

According to the PMBOK Guide (a guide to the project management body of knowledge), the determine budget process helps in establishing the project’s authorized cost baselines. The cost baseline is a metric against which the project’s actual resource procurements and allocation are measured. Thus, the determine budget process follows the estimate costs process under the project cost management knowledge area of project management.

Determine Budget Process

Apart from determining the project’s cost baseline, this process helps project managers communicate the project funding requirements with the stakeholders. Therefore, by adjusting the project budget, project managers can ensure the efficient utilization of project resources. Thus, the determine budget process is conducted simultaneously with other crucial project processes like the develop schedule process under project schedule management.

Determine Budget Process

The project’s cost baseline is the primary output of the determine budget process. However, this process also provides essential information about the length of the project and the individual funding requirements for completing each project task. Thus, the project manager adjusts and updates the budget depending on the project’s scope and schedule in the project document updates.

Here are the inputs, tools and techniques, and outputs of the determine budget process:

Inputs of Determine Budget Process

  • Cost Management Plan
  • Scope Baseline
  • Activity Cost Estimates
  • Basis of Estimates
  • Project Schedule
  • Resource Calendars
  • Risk Register
  • Agreements
  • Organizational Process Assets

Tools and Techniques used in Determine Budget Process

  • Cost Aggregation
  • Reserve Analysis
  • Expert Judgement
  • Historical Relationships
  • Funding Limit Reconciliation

Outputs of Determine Budget Process

  • Cost Baseline
  • Project Funding Requirements
  • Project Documents Updates

PMPs (Project Management Professionals) use the determine budget process inputs as well as determine budget process tools and techniques to establish the cost baseline. The other two outputs of the determine budget process are equally important as they help project managers communicate the actual project requirements and keep them updated through proper documentation.


Candidates preparing for the PMP Certification examination should be aware of the new PMP Exam Content Outline (January 2021). The latest curriculum emphasizes value delivery principles rather than fixed processes. PMI’s (Project Management Institute) latest release of the PMBOK Guide reflects these changes. In the seventh edition of the PMBOK Guide, there are new project management standards known as the twelve project delivery principles. These standards replace the earlier standards, ten knowledge areas of project management depicted in the sixth edition. Therefore, PMP aspirants must include the PMBOK Guide 7th Edition in their PMP Certificate Study to learn about the new project management standards.

Posted in Project Management

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