The Preparation Stage
Preparation has always been a key initiative in any undertaking, since it involves the processes of identifying, estimating, allocating and coordinating requirements. In project budgeting, these are done by considering the use of different approaches since stakeholders take a keen interest in how the project funds will be sourced and utilized.
This is the planning phase where the project manager has to make a clear statement of the deliverables, requirements and activities in a scope statement and outline them in a work breakdown structure. The objective is to properly align the costs and resources with the planned activities, in order to come up with an unambiguous groundwork on which to base the cost estimates.
This includes the establishment of the baselines, which is similar to the standard costs used in cost accounting. Best practices also recommend the breaking down of milestones into smaller units when in the process of making costs estimation.
However, those who are still new to or still in the process of learning about project management may still find all these exercises a bit complex. There is no need to worry because you can find in-depth information about cost estimation, baselines and milestone decomposition in the following articles: