What is Budget at Completion (BAC)?
Budget at Completion (BAC) is the total approved budget for all project work, established as a fixed baseline before execution begins. Per PMBOK 6th Edition (p.263), BAC equals the sum of all budgets for the work to be performed. It is the financial anchor of Earned Value Management — the number against which all cost and schedule performance is measured.
PMBOK Definition of BAC
The Project Management Body of Knowledge (PMBOK® Guide, 6th Edition) defines BAC as:
Critically, BAC is fixed at project baseline. It does not change when cost overruns occur — that would be reflected in Estimate at Completion (EAC). BAC only changes through a formal re-baselining process when the approved scope of work changes fundamentally.
BAC vs Cost Baseline vs Project Budget
| Term | Includes | Changes? |
|---|---|---|
| Project Budget | BAC + Management Reserve | Only via formal change control |
| Cost Baseline (BAC) | All work packages + Contingency Reserve | Only via re-baselining |
| EAC | Forecast of actual total cost | Updated regularly during execution |
5 BAC Estimation Techniques
1. Bottom-Up Estimation (Most Accurate)
Estimate each work package individually and sum them. Accuracy: ±5–10%. Best when detailed scope is available. Use our BAC Builder to do this automatically.
2. Analogous Estimation
Use actual costs from similar past projects. Accuracy: ±25–75%. Best for early project stages when detail is limited. Fast but relies on comparable historical data.
3. Parametric Estimation
Use statistical relationships between variables (e.g., cost per square metre, cost per software function point). Accuracy: ±10–20%. Best when reliable historical data exists.
4. Three-Point Estimation (PERT)
Formula: BAC = (Optimistic + 4 × Most Likely + Pessimistic) / 6. Accounts for uncertainty. Produces a more statistically valid estimate than single-point estimates.
5. Expert Judgement
Consult subject matter experts when historical data is unavailable. Often combined with other techniques. Accuracy highly dependent on expert experience.
Real Construction Example
| Cost Category | Budget |
|---|---|
| Labour & Workforce | $400,000 |
| Materials & Supplies | $250,000 |
| Subcontractors | $200,000 |
| Equipment Rental | $100,000 |
| Contingency Reserve (10%) | $95,000 |
| BAC (Cost Baseline) | $1,045,000 |
| Management Reserve | $55,000 |
| Total Project Budget | $1,100,000 |
Common BAC Pitfalls
- Incomplete scope definition — BAC underestimated because not all work packages were identified
- Missing indirect costs — Overhead, G&A, and fringe benefits excluded from estimates
- Ignoring risk — No contingency or management reserve included
- Weak change control — Scope creep added without updating the cost baseline
BAC, EAC, and VAC — Key Relationships
| Metric | Formula | Meaning |
|---|---|---|
| BAC | Fixed at baseline | What we planned to spend |
| EAC | BAC / CPI (most common) | What we now forecast to spend |
| VAC | BAC − EAC | Projected surplus (+) or overrun (−) |