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can you clarify what you mean by a performance budget? Is that like a trimmed down version of the full budget representing the best case scenario for project costs?
So the way it was explained to me is that a performance budget is a trued up budget of what will be actually spent because items were missed in the estimate. It sounds like more of a worse case scenario in that things were missed in the estimate.
You have a budget which usually based on estimates at one point in time. At some point you need to baseline the approved budget, and measure actuals against the approved budget. If it appears actuals will surpass the approved/ baselined budget, then you either follow your formal approval process to increase the budget, or reduce scope and re-baseline.
I can appreciate that sentiment. We often have expectations built on the initial (and often wildly optimistic) estimate, and then lower expectations after we develop the fully defined SOW.
I remember once asking a director during a PD planning exercise whether they wanted a ROM or a commitment level estimate. Their response is they wanted a commitment level ROM. I took a mental note to plan for a rocky road of budget issues.
After discussing the issue more, I pointed that out that it sounds more like a forecast and where would the additional funds come from to support it. They saw my point after that. Thank you to everyone on this. I wanted to make sure I wasn't making a wrong statement on a concept I haven't come across yet.
When you talked about estimations my recommendation is taking a closer look to Barry Bohem´s Cone of Uncertainty. It will help a lot. On the other side, what you control along the project are project costs that you have to compare with the forecasted budged or in other words with the money you still have available to spend in your project.
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