According to the PMBOKGuide, the project manager should include projected inflation rates in the budget estimate for a long-term project that will be executed over several years. This is because inflation rates affect the purchasing power of the project funds and the cost of resources over time. By including projected inflation rates, the project manager can account for the changes in the value of money and the cost of goods and services, and adjust the budget accordingly. This is part of the Estimate Costs process, which involves developing an approximation of the monetary resources needed to complete the project activities. References:
(Professional in Business Analysis Reference Materials source and documents)
* PMBOKGuide, 6th edition, Chapter 7, Section 7.2, Estimate Costs
* PMP Exam Prep, 10th edition, Rita Mulcahy, Page 223, Estimate Costs