Question

You have been assigned as a project manager for a new project and are asked to calculate the budget for it. You have calculated the cost of all work packages as 200,000 USD. The estimated contingency reserve is 40,000 and the management reserve is 6% of the cost baseline. Calculate the project budget.

Answer 1

The project budget can be calculated by summing the cost baseline ($200,000), the contingency reserve ($40,000), and the management reserve which is 6% of the cost baseline ($12,000). This results in a total project budget of $252,000.

Step-by-step explanation:

To calculate the project budget, we start with the sum of all work packages which amounts to $200,000. This is known as the cost baseline. Next, we add the estimated contingency reserve of $40,000. Then we must consider the management reserve, which is calculated as 6% of the cost baseline. Therefore, 6% of the cost baseline ($200,000) is $12,000.

Adding all these figures together, the project budget can be determined as follows:

Project Budget = Cost Baseline + Contingency Reserve + Management Reserve

Project Budget = $200,000 + $40,000 + $12,000

Project Budget = $252,000

The total project budget is therefore calculated to be $252,000.