Budget at Completion (BAC) is the total approved budget for a project, set during planning and used as the fixed cost baseline against which all earned value performance is measured. BAC is not calculated using a mathematical formula with variables — it is the sum of every approved work package budget, built bottom-up during the planning process. Once established, BAC changes only through formal change control, never from ordinary cost or schedule variance.
Budget at Completion (BAC) is the total approved budget allocated to a project, representing the sum of every work package’s approved cost estimate. PMI’s cost management processes establish BAC during planning, and it functions as the fixed cost baseline every earned value calculation measures against.
How Is BAC Calculated?
BAC is calculated by summing the approved cost estimate of every work package in the project, not by applying a formula with variable inputs. The total is built during planning, work package by work package, then aggregated into a single project-level figure.
A software project has four work packages with approved cost estimates:
- Design: $40,000
- Development: $65,000
- Testing: $30,000
- Deployment: $25,000
BAC = $40,000 + $65,000 + $30,000 + $25,000 BAC = $160,000
This figure becomes the fixed reference point for every subsequent EVM calculation on the project.
What Is the Difference Between BAC and Cost Baseline?
BAC and Cost Baseline refer to the same figure: the sum of all work package cost estimates plus contingency reserves, excluding management reserve. Management Reserve sits outside BAC entirely, held separately for unplanned scope that has not yet been identified.
- Cost Baseline / BAC — sum of work package estimates plus contingency reserves for identified risks.
- Management Reserve — funds held separately for unidentified risks, not distributed to any work package.
- Total Project Budget — Cost Baseline (BAC) plus Management Reserve.
A project with a $180,000 Cost Baseline and a $20,000 Management Reserve has a BAC of $180,000, not $200,000. The $200,000 figure describes the total project budget, a distinct value from BAC.
Does BAC Ever Change?
BAC remains fixed throughout normal project execution and changes only when an approved scope change passes through formal integrated change control. Cost overruns, schedule delays, and ordinary performance variance never alter BAC on their own — those variances show up in EAC and VAC instead, while BAC stays constant as the original benchmark.
How Is BAC Used in Other EVM Formulas?
BAC serves as a direct input to nearly every earned value formula, anchoring Planned Value, Earned Value, and multiple forecasting calculations. Without a fixed BAC, none of these downstream formulas have a stable baseline to measure against.
- Planned Value (PV) = Planned % Complete × BAC
- Earned Value (EV) = % Work Complete × BAC
- Estimate at Completion (EAC) = BAC / CPI, one of four EAC formula variants
- Variance at Completion (VAC) = BAC − EAC
- To-Complete Performance Index (TCPI) = (BAC − EV) / (BAC − AC)
What Common Mistakes Do Project Managers Make With BAC?
The most common BAC mistakes involve confusing it with EAC, folding Management Reserve into the figure, and assuming it updates automatically as costs shift. Each mistake produces cost reporting that misrepresents the project’s actual budget status.
- Confusing BAC with EAC, reporting a forecast when the original fixed budget was requested.
- Including Management Reserve inside BAC, inflating the baseline beyond its approved scope.
- Assuming BAC updates automatically when actual costs exceed the plan, rather than staying fixed until a formal change is approved.
- Treating a rebaselined BAC as if it always applied, without documenting when and why the change occurred.
How Does BAC Appear on the PMP Exam?
The PMP exam tests BAC through conceptual questions about its definition and composition, and through calculation questions requiring candidates to sum work package estimates or distinguish BAC from total project budget. BAC rarely appears in isolation — most questions embed it inside a broader EVM scenario.
Sample Question 1: What does Budget at Completion (BAC) represent? A) The forecasted total cost of the project based on current performance B) The total approved budget for the entire project, set during planning C) The amount of money spent on the project to date D) The remaining cost needed to finish the project
Sample Question 2: A project has a Cost Baseline of $240,000 and a Management Reserve of $30,000. What is the project’s BAC? A) $270,000 B) $240,000 C) $30,000 D) $210,000
Sample Question 3: A project has five work packages with approved estimates of $22,000, $38,000, $15,000, $47,000, and $18,000. What is the project’s BAC? A) $122,000 B) $140,000 C) $47,000 D) $47,000 plus Management Reserve
Sample Question 4: Midway through a project, actual costs run significantly above plan due to unexpected vendor pricing, with no approved scope change. What happens to BAC? A) BAC increases to reflect the new pricing B) BAC decreases to offset the overrun C) BAC remains unchanged D) BAC is recalculated using the current CPI
Answers: 1) B — BAC is the total approved budget established during planning, distinct from EAC (forecast), AC (spent to date), and ETC (remaining cost). 2) B — BAC equals the Cost Baseline, $240,000; Management Reserve is held separately and is not part of BAC. 3) B — $22,000 + $38,000 + $15,000 + $47,000 + $18,000 = $140,000. 4) C — BAC remains unchanged without an approved scope change; cost overruns are captured through EAC and VAC, not through a revised BAC.
Frequently Asked Questions
Is BAC the Same as Total Project Budget?
BAC is not the same as total project budget — BAC equals the Cost Baseline, while total project budget equals BAC plus Management Reserve. Confusing the two produces an inflated BAC figure that misrepresents the actual cost baseline used in EVM calculations.
Can BAC Decrease During a Project?
BAC can decrease during a project, but only through formal integrated change control following an approved reduction in project scope. Performance shortfalls, cost overruns, or schedule delays never reduce BAC on their own.
Where Does BAC Come From in the Planning Process?
BAC comes from the Determine Budget process, where individual work package cost estimates and contingency reserves are aggregated into a single, approved project-level figure. This figure becomes the cost baseline carried into project execution.
How Is BAC Different From EAC?
BAC is the original, fixed budget set during planning, while EAC is a forecast of total project cost that updates continuously based on actual performance. BAC never moves without a formal change; EAC is recalculated at every reporting period.
