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TOPIC: Cost performance baseline

Cost performance baseline 7 years 4 months ago #3330

  • Monika Khanna
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Is contingency reserve included in cost performance baseline?
I understood from Rita's book that contingency reserve is included in aggregated cost estimates to get cost baseline. By adding management reserve to cost baseline we get consolidated budget.
On reserve analysis TT discussion in PMBOOK , I came across statement that " Reserves are not part of project cost baseline, but may be included in the total budget for the project" . Is this statement for management reserves only?
In prepcast podcast for determine budget , I couldn't get this very clearly.
Last edit: by Monika Khanna.

Cost performance baseline 7 years 4 months ago #3339

  • Cornelius Fichtner
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Monika,

In Lesson E07.01 we write the following:

Contingency Reserve : The amount of funds, budget, or time needed above the estimate to reduce the risk of overruns of project objectives to a level acceptable to the organization.

Management Reserve : Budget reserves for unplanned changes to the project.

And in the narrative I explain that Contingency Reserve is part of the project budget, but that the Management Reserve is not, but instead it is part of the overall budget of the department and can be assigned to any project that is in trouble and needs additional cash to overcome those troubles.
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC
Last edit: by Cornelius Fichtner.

Cost performance baseline 7 years 3 months ago #3378

  • Srivathsalachary Vangeepuram
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I vaguely remember this correction to be included in PMBOK errata (Management reserves not part of cost baseline). Please have a look at errata in PMI site.

Regards,
Chary
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