Certified Supply Chain Professional (CSCP) Practice Exam

Which term best describes the approved financial plan for a project?

1. Cost estimate

2. Budget forecast

3. Cost baseline

4. Expense management plan

The correct answer is: Cost baseline

The term that best describes the approved financial plan for a project is known as the cost baseline. The cost baseline is a specific, agreed-upon budget that outlines the total estimated financial resources required for the project, breaking it down into components that can be tracked and managed over the project's lifecycle. This framework allows for measuring performance against the budget by defining what expenditures are planned and aligning those with specific phases of the project. The cost baseline serves as a standard for comparing actual project expenses, ensuring that any financial variances can be properly identified and managed. In contrast, a cost estimate is typically an initial assessment of what a project might cost but is not yet an approved figure. A budget forecast usually refers to future financial predictions, which can help in planning but might not reflect finalized numbers. An expense management plan focuses on the processes by which project costs will be monitored and controlled, but it doesn't represent the approved financial plan itself. Therefore, the cost baseline is the most accurate descriptor for the approved financial plan for a project.