Planning: budget development and procurement (make vs buy, RFI, RFP, RFQ, statement of work, contract types)

The project budget is built by adding up the cost estimates for activities and work packages, then adding the contingency reserve for identified risks. That total, spread over time, is the cost baseline, often drawn as an S-curve because spending starts slowly, speeds up during execution and tails off at the end. The management reserve for unknown risks is added on top to form the total project budget, but it is held by management. Budgets include labor, hardware, software licenses, cloud subscriptions, facilities, training, travel and vendor costs. It is important to distinguish capital expenses (CapEx, such as buying servers, often depreciated over years) from operating expenses (OpEx, such as monthly cloud or software as a service, SaaS, fees), because organizations fund and account for them differently. Funding may also be released in stages or tied to fiscal years, which the project manager must plan around.