Variance at Completion (VAC) forecasts the budget surplus or deficit a project is expected to have once it finishes, calculated as Budget at Completion minus Estimate at Completion. A positive VAC forecasts finishing under budget; a negative VAC forecasts finishing over budget. Unlike Cost Variance, which measures budget performance to date, VAC is entirely forward-looking — it projects an outcome that has not happened yet.
What Is Variance at Completion (VAC)?
Variance at Completion (VAC) is a forecast of the budget deficit or surplus a project is expected to have at completion, calculated as the difference between the original approved budget and the current cost forecast. PMI classifies VAC as one of the core earned value metrics, distinct from to-date measurements like Cost Variance because it projects a future outcome rather than measuring current status.
What Is the Variance at Completion Formula?
The Variance at Completion formula is VAC = BAC − EAC, where BAC is the original approved budget and EAC is the current forecasted total cost. Both inputs come directly from existing EVM data — VAC requires no new measurements of its own.
How Do You Calculate Variance at Completion?
A project manager calculates VAC by subtracting the current Estimate at Completion from the original Budget at Completion.
A data center migration project has a BAC of $180,000. Based on current performance, the project’s EAC has been recalculated at $195,000.
VAC = $180,000 − $195,000 VAC = −$15,000
The project is forecast to finish $15,000 over its original budget.
A second project, a marketing platform rollout, has a BAC of $95,000 and a current EAC of $88,000.
VAC = $95,000 − $88,000 VAC = +$7,000
This project is forecast to finish $7,000 under its original budget.
How Do You Interpret Variance at Completion?
A positive VAC forecasts the project finishing under budget, a negative VAC forecasts the project finishing over budget, and a VAC of exactly zero forecasts the project finishing exactly on budget. The interpretation is consistent regardless of project size — only the sign of the result changes what it signals.
- VAC > 0 — favorable; the project is forecast to finish under its original budget.
- VAC = 0 — the project is forecast to finish exactly on budget, indicating an accurate original estimate combined with disciplined execution.
- VAC < 0 — unfavorable; the project is forecast to finish over its original budget.
How Does VAC Relate to Cost Variance (CV)?
VAC and CV both measure budget performance, but CV measures it as of today while VAC projects what that performance will look like once the project is finished. VAC is best understood as a forward-looking projection built on top of the same underlying cost data CV uses to measure current status.
How Does VAC Relate to BAC and EAC?
VAC is derived entirely from BAC and EAC, with no independent formula elements of its own — understanding VAC requires understanding both of its component metrics first.
What Actions Should a Project Manager Take Based on VAC?
A negative VAC calls for communicating the projected overrun to stakeholders, evaluating scope adjustments, and requesting additional funding if the original scope must be preserved; a positive VAC calls for confirming the surplus is real before reallocating it to additional work. The appropriate response depends on the sign and magnitude of the result, not a single fixed action.
- Communicate a negative VAC to stakeholders promptly, rather than waiting for it to close further.
- Evaluate scope adjustments as an option to bring a negative VAC back toward zero.
- Request additional funding through formal channels when scope must be preserved despite a negative VAC.
- Confirm a positive VAC reflects a genuine surplus, not a temporary reporting anomaly, before committing the funds elsewhere.
How Does VAC Appear on the PMP Exam?
The PMP exam tests VAC through direct calculation questions, questions requiring EAC to be derived first, and conceptual questions distinguishing VAC from Cost Variance. Exam scenarios frequently supply more data than the VAC formula actually requires, testing whether candidates can identify which figures matter.
Sample Question 1: A project has PV = $310,000, AC = $340,000, EV = $320,000, EAC = $560,000, and BAC = $600,000. What is the VAC? A) $20,000 B) $30,000 C) $40,000 D) $60,000
Sample Question 2: A project has EV = $210,000, PV = $230,000, AC = $225,000, and BAC = $300,000. The current cost variance stems from a one-time event unlikely to recur. What is the VAC? A) $0 B) −$15,000 C) $15,000 D) −$90,000
Sample Question 3: A project’s VAC is calculated at exactly $0. What does this indicate? A) The project has no remaining work B) The project is forecast to finish exactly on its original budget C) The BAC and EAC values are both incorrect D) The project cannot be measured using EVM
Sample Question 4: A stakeholder asks for the project’s current budget performance as of today, not a forecast of the final outcome. Which metric should the project manager provide instead of VAC? A) Cost Variance (CV) B) Budget at Completion (BAC) C) To-Complete Performance Index (TCPI) D) Schedule Variance (SV)
Answers: 1) C — VAC = BAC − EAC = $600,000 − $560,000 = $40,000; PV, AC, and EV are not required for this calculation. 2) B — EAC = AC + (BAC − EV) = $225,000 + ($300,000 − $210,000) = $315,000; VAC = $300,000 − $315,000 = −$15,000. 3) B — a VAC of exactly zero forecasts the project finishing precisely on its original budget. 4) A — Cost Variance measures budget performance as of the current reporting date, while VAC is a forward-looking forecast of the final outcome.
Frequently Asked Questions
Is VAC the Same as Cost Variance?
VAC and Cost Variance are related but distinct — Cost Variance measures budget performance as of today, while VAC forecasts budget performance at project completion. Treating the two as interchangeable is a common point of confusion, since both are expressed in dollar terms and both indicate favorable or unfavorable budget status.
Can VAC Be Zero?
VAC can be zero, and a zero VAC indicates the project’s current cost forecast exactly matches its original approved budget. A VAC at or very close to zero is generally read as a sign of an accurate original estimate combined with disciplined budget control throughout execution.
What Does a Large Negative VAC Signal?
A large negative VAC signals a significant forecasted budget overrun, warranting prompt communication to stakeholders and evaluation of corrective options such as scope adjustment or additional funding requests. The larger the negative value relative to the original BAC, the more urgent the corrective conversation becomes.
Is VAC One of PMI’s Core EVM Formulas?
VAC is one of PMI’s core earned value management formulas, calculated directly from BAC and EAC and used specifically to forecast the budget outcome at project completion. It functions alongside CV, CPI, SPI, EAC, and ETC as part of the complete EVM formula set.
