---
reference_type: Performance Domain
reference_id: PD8-04
name: Finance
version: "1.0.0"
status: Active
edition: PMBOK8
pmbok8_source: "PMBOK8 Guide §2.4 — Finance Performance Domain"
authority: PMI-derived
file_path: "reference/performance-domains/PD8-04-finance.md"
last_updated: "2026-06-07"
---

# PD8-04 — Finance Performance Domain
**Type:** Performance Domain  
**Edition:** PMBOK 8th Edition (2025)  
**PMBOK 8 Source:** PMBOK8 Guide §2.4 — Finance Performance Domain  
**Version:** 1.0.0  

## Definition
The **Finance Performance Domain** addresses activities and processes associated with planning, estimating, budgeting, and controlling costs so that the project can be completed within the approved budget and maximize investment returns (PMBOK8 §2.4). It focuses on aligning financial allocations with project priorities, establishing cost baselines, tracking variances, and conducting forecasting.

## Desired Outcomes
Per PMBOK8 §2.4, effective execution of the Finance Performance Domain results in:
- **Financial plans and budgets** that are fully aligned with the development approach and project deliverables.
- **Accurate cost estimation** that accounts for direct, indirect, capital, and operating expenses.
- **Project completeness** within or below the approved budget, minimizing unauthorized cost increases.
- **Financial visibility and transparency** achieved through regular monitoring, variance analysis, and forecasting.
- **Optimized return on investment** by tracking financial performance against the business case.

## Key Processes and Activities
This domain encompasses the following 4 canonical processes (PMBOK8 §2.4.2):
1. **Plan Financial Management** (§2.4.2.1) — Establishes the policies, procedures, and documentation for planning, managing, expending, and controlling project costs.
2. **Estimate Costs** (§2.4.2.2) — Develops an approximation of the monetary resources needed to complete project activities.
3. **Develop Budget** (§2.4.2.3) — Aggregates the estimated costs of individual activities or work packages to establish an authorized cost baseline.
4. **Monitor and Control Finances** (§2.4.2.4) — Monitors the status of the project to update project costs and manages changes to the cost baseline.

## Relationship to Principles
| Principle | Connection |
|---|---|
| P8-01 — Holistic View | Finance interacts with scope, schedule, risk reserves, and long-term organizational strategy to prevent project failures (§3.3.3). |
| P8-02 — Focus on Value | Financial resources must be managed as investments, continuously checking ROI, NPV, and IRR against the business case (§2.4, §3.4.3). |
| P8-03 — Embed Quality | Embedding quality in financial processes prevents rework, scrap, and wasteful overhead expenditures (§3.5.3). |
| P8-05 — Integrate Sustainability | Finance includes lifecycle cost analysis, social return on investment (SROI), and environmental cost accounting (§3.7.3). |

## Artifact Connections
| Artifact | Connection |
|---|---|
| A16 — Financial Baseline | The approved budget version, excluding management reserves, used to measure cost variance. |
| A01 — Business Case | Defines target financial metrics (payback period, ROI, CapEx/OpEx boundaries). |
| A20 — Quantitative Risk Reserve Decision Record | Documents contingency and management reserve allocations based on risk exposure. |

## Skill Connections
| Skill ID | Skill Name | Connection |
|---|---|---|
| SKL-03-07 | Plan Financial Management and Budgeting | Establishes budget models, control thresholds, and tracking mechanisms. |
| SKL-05-13 | Perform Earned Value Analysis | Calculates EVM metrics (CV, SV, CPI, SPI, EAC) and forecasts financial completion. |
| SKL-05-05 | Monitor and Control Finances | Manages invoices, tracks actual expenditure, and regulates cost baseline changes. |

## Questions to Ask in Practice
1. Are our cost estimates based on historical data, vendor quotes, or parametric modeling, and how high is their uncertainty?
2. Are we tracking actual expenditures progressively, or are we discovering cost overruns too late?
3. How are contingency and management reserves being managed, and what is the approval threshold for their release?
4. Does the team understand how scope or schedule delays affect our cash flow and overall financial viability?

*Authority: PMBOK8 Guide §2.4 — Finance Performance Domain · Source type: PMI-derived*
*Repository: https://github.com/fakhruldeen/PMOSkills*
