What is a Cost Baseline?
The cost baseline is the approved, time-phased budget for the project work — not just a total, but when the money is planned to be spent, plotted over time (the S-curve). It includes contingency reserves for identified risks; it excludes management reserve, which sits above it.
It's the yardstick earned value management measures against: planned value comes straight off the baseline curve. Change it only through formal change control — a baseline you quietly re-draw to match reality isn't a baseline, it's a diary.
Formula
Cost baseline + management reserve = total project budget
Worked example
A $2.4M ERP implementation phases its baseline: $300K by end of design, $1.1M by end of build, $2.4M at go-live. In month five actuals show $1.3M spent against $1.0M planned — the baseline is what turns "we're spending a lot" into "we're $300K ahead of plan, let's find out why."