Project Budget (Cost Baseline)

Phase: Planning | Audience: Internal | Project: WEB-2026-01 Corporate Website Development

Understand it first

In simple words: The Project Budget estimates how much the project will cost us, adds reserves for risks, and sets the cost baseline that actual spending is measured against. It also shows when money will be spent.

Think of it like: Planning a family trip: tickets ₹40,000, hotel ₹30,000, food ₹15,000, plus ₹10,000 extra in case of surprises. The total is your budget, and you track spending against it.

How it connects to other documents

1. Labour hours come from the WBS.
2. Contingency amounts come from the Risk Register.
3. The cost baseline is used by the EVM tracker to measure performance.

The sample document

Below is the actual document for project WEB-2026-01. Read the purpose first, then go through each numbered section.

Project budget document · Version 1.0 · Baseline for approval

Purpose: A 10-page responsive business website with a content management system (CMS), contact forms and basic SEO, delivered in 10 weeks. This document sets the approved cost baseline, explains how every number was estimated, and defines how spending will be tracked and controlled.

Total project budget: ₹5,26,700

Total project budget = cost baseline ₹5,03,800 + management reserve ₹22,900

1. Labour ₹4,02,000 (76%)
2. Non-labour ₹56,000 (11%)
3. Contingency ₹45,800 (9%)
4. Management reserve ₹22,900 (4%)

1. Project scope in brief

The budget covers only the work listed here. Anything outside this list is a change request and needs separate approval (see section 10).

2. Assumptions and constraints

1. Rates are internal blended cost rates per hour for the Indian market and exclude GST (18% applies if the work is billed to a client).
2. The client provides the logo, brand colours and approves designs within 3 working days of each review.
3. Two rounds of design revisions are included; a third round is covered by contingency.
4. The team works 40-hour weeks; nobody is allocated to this project full-time.
5. Open-source tools are used wherever possible (WordPress, Let's Encrypt SSL).
6. Constraint: the launch date is fixed, so schedule overruns are resolved by adding hours, which costs money.

PM note: why assumptions matter: Every estimate rests on assumptions. Writing them down means that when one turns out to be false (say, client approvals take two weeks instead of three days), you can point to it and justify a budget change instead of absorbing the cost silently.

3. Labour cost estimate (resource plan)

Labour is calculated as Hours × Hourly rate for each role. The hours come from the phase-wise breakdown in section 5.

4. Non-labour cost estimate

These are purchases, subscriptions and licences, the things you pay for that aren't people's time.

PM note: list the ₹0 items too: Showing the free SSL certificate proves you thought about it. Reviewers often ask "what about SSL?", and a visible ₹0 line answers that before they do.

5. Budget by phase (WBS view)

This is the bottom-up build. Each phase is a work package; its cost is the sum of the hours each role spends on it plus the purchases made during it.

Hours per role per phase

Cost per phase

PM note: check your totals both ways: The labour total by role (section 3) and by phase (this table) must both equal ₹4,02,000. If they don't match, there's an error somewhere. This cross-check is the simplest quality control you can do on a budget.

6. Contingency reserve

Contingency is money set aside for known risks, things we can foresee might happen. It is set at 10% of direct cost (₹45,800) and is justified by the risks below. The PM can release it, with a note in the risk log.