Budget at Completion (BAC) is the total approved budget for a project, program, or work package, representing the sum of all allocated budgets for the work to be performed. It serves as a key reference in earned value management (EVM) to compare against actual expenditures and forecast project performance.
Key Aspects of Budget at Completion (BAC)
- Represents Total Budgeted Cost – The full financial allocation for a project.
- Basis for Performance Tracking – Used to measure cost efficiency and overruns.
- Integral to Earned Value Analysis – Helps in variance calculations and forecasting.
- Fixed Unless Approved for Change – Any modifications must go through formal change control.
BAC Formula
BAC = Σ (All Approved Budgets for Project Activities)
Example Scenarios
Software Development
- A project to develop a new mobile app has a BAC of $500,000. This is the total approved budget for development, testing, and deployment.
Construction Project
- A company constructs a commercial office building with a BAC of $10M. This includes labor, materials, equipment, and contingency reserves.
Marketing Campaign
- A product launch campaign has a BAC of $200K, covering advertising, content production, and digital promotions.
BAC in Earned Value Management (EVM)
BAC is used in several EVM calculations:
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Cost Performance Index (CPI):
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Estimate at Completion (EAC) (Assuming Current CPI Holds):
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Variance at Completion (VAC):
Why BAC Matters
- Establishes Cost Baseline – Defines the financial limit for project expenditures.
- Supports Forecasting & Variance Analysis – Helps predict final project costs.
- Improves Cost Control – Provides a reference for managing actual expenses.
- Aids in Risk Management – Identifies potential overruns before they escalate.
See also: [[Actual Cost (AC), Earned Value (EV), Estimate at Completion (EAC), Estimate to Complete (ETC), Planned Value (PV).