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Chapter 7. Introducing Project Cost Mana... > Certification Objective 7.04: Implem... - Pg. 355

Implementing Cost Control 355 monies and over what time period. The purpose of the cost baseline is to measure and predict project performance. Large projects that have multiple deliverables may have multiple cost baselines to illustrate the costs within each phase. In addition, larger projects may have cost baselines to predict spending plans, cash flows of the project, and overall project performance. The purpose of a cost baseline is to measure performance, and a baseline will predict the expenses over the life of the project. Any discrepancies early on between the predicted baseline and the actual costs serve as a signal that the project is slipping. Establishing Project Funding Requirements The project's cost baseline can help the project manager and the organization determine when the project will need cash infusions. Based on phases, milestones, and capital expenses, the project funding requirements can be mapped to the project schedule and the organization can plan accordingly. This is where the concept of project step funding originates from. The curve of the project's timeline is funded in steps, where "step" is an amount of funds allotted to the project to reach the next milestone in the project. Recall from the project lifecycle that milestones are usually tied to the completion of project phases. Each phase creates a deliverable and usually allows the project to move on to the next phase of project execution. The pause for review and determination of additional funds for the project is called a phase gate. CERTIFICATION OBJECTIVE 7.04 Implementing Cost Control Cost control focuses on the ability of costs to change and on the ways of allowing or preventing cost changes from happening. When a change does occur, the project manager must document the change and the reason why the change occurred and,