g. Vendor bid analysis – For doing the cost estimation, we will outsource. We will invite the quotation or bids and analyse them.
h. Cost of Quality – It means cost incurred on conformance to the requirements and non-conformance to the requirements.
       i. Cost of Conformance – Cost of Prevention [Preventing defects. Example: Money spent on getting the right process, right equipment, right people, training, etc.] and Cost of Appraisal [Example: Testing, Inspection, Review, Audit]
       ii. Cost of non-conformance – Cost of Failure (or Cost of Poor Quality) [Example: Re-work, repair, replacement, scrap, warranty cost]

3. Determine Budget [Process / Planning] – We add up cost estimates to prepare Project Budget. We time-phase project budget with the help of the schedule to prepare Cost Baseline. Shape of Cost Baseline is ‘S’ curve. Also, we add “Management Reserve” in the Project Budget for managing unidentified risks which is also known as Unknown Unknowns. Therefore, Project Budget = Cost Baseline + Management Reserve.

Money from the Management Reserve is allowed only when the unidentified risk occur. For getting money from the management reserve, we are required to raise the change request and get it approved by the change control board.

We reconcile fund requirements with the fund limits, if any. It leads to re-scheduling.