Budget at completion (BAC) is the total authorized budget assigned to complete a defined scope of work. At the total project or contract level, BAC generally represents the Performance Measurement Baseline (PMB) and excludes Management Reserve (MR).
BAC answers a specific question: What was the authorized work budgeted to cost? It does not show what the work will actually cost, how much funding remains or the total contract price. Those distinctions matter when control account managers, program managers and customers evaluate performance.
The Department of Energy’s Project Management Lexicon defines BAC as the total authorized budget for the project scope. It includes allocated budget and undistributed budget, but not Management Reserve.
Budget at Completion Formula
At any reporting level, BAC is the sum of the budgets assigned to the work within that level:
BAC = Sum of all authorized budgets for the defined scope
Because Planned Value (PV) is the authorized budget distributed across time, BAC also equals the total cumulative PV at planned completion:
BAC = Sum of all time-phased PV through completion
The older term for Planned Value is Budgeted Cost for Work Scheduled (BCWS). Therefore, BAC also equals the sum of BCWS across all periods. For a review of the terminology change, see BCWS, BCWP and ACWP vs PV, EV and AC.
If cumulative PV at the end of the baseline does not equal BAC, the cost system contains a reconciliation problem. Possible causes include missing time-phased budget, duplicate budget, incorrect reporting filters or an incomplete baseline change.
Where BAC Fits in the EVMS Budget Structure
BAC exists at several levels of an Earned Value Management System (EVMS). For example, a work package has a BAC, a control account has a BAC and a Work Breakdown Structure element can have a summarized BAC.
Work package and planning package budgets
A control account BAC consists of the budgets assigned to its work packages and planning packages. Work packages contain detail-planned work, while planning packages hold future work that has not yet been planned in detail.
A simple control account relationship is:
Control account BAC = Work package budgets + Planning package budgets
As planning packages convert into work packages, the distribution changes. However, the control account BAC should remain unchanged unless an authorized budget change affects that control account.
Performance Measurement Baseline
At the project or contract level, the PMB includes control account budgets and any applicable Undistributed Budget (UB) or Summary Level Planning Packages. The exact structure depends on the organization’s approved system and the contract’s reporting requirements.
The DOE EVMS Gold Card presents the common relationship as:
PMB = Control accounts + Undistributed Budget + Summary Level Planning Packages
Therefore, the total BAC normally equals the PMB. For more detail on developing this baseline, see how to build a robust Performance Measurement Baseline.
Management Reserve is not part of BAC
Management Reserve provides budget for authorized, in-scope work that cannot be identified and budgeted in advance. Because MR has not yet been assigned to scheduled work, it remains outside the PMB and is not included in BAC.
In a common contractor EVMS budget hierarchy:
Contract Budget Base = Performance Measurement Baseline + Management Reserve
As a result, BAC should not automatically equal the Contract Budget Base. It also should not include customer contingency, fee or profit.
BAC vs EAC, Contract Price and Funding
Several program values may appear similar but serve different purposes. Confusing them can distort management analysis and customer reporting.
BAC vs Estimate at Completion
BAC is the baseline budget for authorized scope. Estimate at Completion (EAC) is the current forecast of the total cost when that scope finishes.
- BAC: What the work was budgeted to cost.
- EAC: What the team now expects the work to cost.
BAC provides the benchmark. Meanwhile, EAC reflects actual performance, remaining work, current rates, risks, opportunities and the control account manager’s forecast.
An overrun does not disappear because the EAC exceeds BAC. Instead, the difference becomes the Variance at Completion:
VAC = BAC − EAC
A negative VAC indicates a forecast overrun. A positive VAC indicates a forecast underrun. The related guide to TCPI, VAC, ETC and advanced EVM measures explains how these values support at-completion analysis.
BAC vs contract price
BAC is not the contract price. Contract price may include fee, profit or other elements that do not form part of the performance budget. In addition, the relationship can change because of authorized unpriced work, contract modifications or an approved over-target baseline.
Therefore, analysts should reconcile BAC through the EVMS budget hierarchy rather than assume it must equal the face value of the contract.
BAC vs funding
BAC is also different from funding. Budget assigns value to authorized work for planning and performance measurement. Funding concerns the availability and timing of money for contract execution.
A program may have a valid BAC even when funding arrives incrementally. Conversely, available funding does not authorize a team to add unapproved scope or budget to the PMB.
How BAC Supports Earned Value Analysis
BAC acts as the denominator or reference point for several forward-looking measures. However, each measure answers a different management question.
Budget-based percent complete
Earned Value (EV) divided by BAC gives the budget-based percentage of work completed:
Percent complete = Cumulative EV ÷ BAC
This result reflects progress measured through the approved earned value techniques. It may differ from a subjective physical-percent-complete estimate.
Variance at Completion
VAC compares the baseline budget with the current forecast:
VAC = BAC − EAC
Program managers should investigate the assumptions behind the EAC rather than focus only on the size of the VAC. For example, an optimistic EAC may understate remaining labor, supplier exposure or schedule-driven cost growth.
To-Complete Performance Index
The To-Complete Performance Index based on BAC shows the future cost efficiency needed to complete the remaining work within the original budget:
TCPIBAC = (BAC − EV) ÷ (BAC − AC)
Here, AC means cumulative Actual Cost. The NASA Program Planning and Control Glossary provides this formula and distinguishes it from TCPI calculated against EAC.
Compare TCPI with the cumulative Cost Performance Index (CPI). If the required future efficiency is substantially better than demonstrated performance, completing within BAC may not be credible without a specific and supportable recovery plan.
Fictional Program Example
Consider the fictional Ridgeway Communications Upgrade. The program has four control accounts and a small amount of Undistributed Budget:
- Systems engineering: $3 million
- Hardware development: $9 million
- Software development: $6 million
- Integration and test: $5 million
- Undistributed Budget: $1 million
The program BAC is $24 million. It also holds $2 million of Management Reserve. Therefore, the PMB and BAC equal $24 million, while the Contract Budget Base equals $26 million.
At the current status date, the program reports:
- PV: $10 million
- EV: $8.5 million
- AC: $9.2 million
- EAC: $27 million
The program has completed approximately 35.4 percent of its budgeted work because $8.5 million divided by the $24 million BAC equals 35.4 percent. Its CPI is approximately 0.92, and its Schedule Performance Index (SPI) is 0.85. For practical interpretation of those indices, see CPI vs SPI for program managers.
The VAC is negative $3 million:
VAC = $24 million − $27 million = −$3 million
In addition, TCPI based on BAC is approximately 1.05. The team has achieved only $0.92 of budgeted work for each dollar spent to date, yet it must earn about $1.05 of budgeted work per future dollar to finish within BAC. Therefore, the program manager should challenge any claim that the original BAC remains achievable unless the team can explain the expected efficiency improvement.
When Can Budget at Completion Change?
BAC is a controlled baseline value, but it is not necessarily fixed for the entire life of a program. It can change through authorized and documented baseline maintenance.
Common situations include:
- Authorized scope changes: New scope may add budget to the Contract Budget Base and PMB after formal authorization and budgeting.
- Management Reserve allocation: An approved MR draw moves budget into one or more control accounts. Total BAC increases, MR decreases and the Contract Budget Base remains unchanged.
- Budget transfers: Authorized transfers may change lower-level BAC values without changing total program BAC.
- Internal replanning: Teams may redistribute future budget within defined limits while preserving appropriate traceability and control.
- Over-target baseline: A formally approved rebaseline may establish a performance budget above the Contract Budget Base. This requires careful documentation and customer coordination.
In contrast, a team should not increase BAC merely to eliminate an unfavorable variance or make performance appear better. The exact approval authority, documentation and reporting process depends on the contract, agency, program and contractor’s approved EVMS description.
Why BAC Matters to Schedulers
BAC is a cost baseline value, not a schedule date. However, the Integrated Master Schedule (IMS) provides the time dimension needed to spread the budget into accounting periods.
Schedulers and cost analysts should confirm that the schedule and cost system describe the same authorized scope. They should also verify that planned dates, work package boundaries, earned value techniques and time-phased budgets remain aligned.
A schedule update can move forecast dates without changing BAC. However, an approved baseline change may alter both the schedule baseline and the distribution of PV. In that case, the team should confirm that cumulative PV still reconciles to BAC after the change.
Poor integration can produce misleading results. For example, budget may remain in past periods for work that has moved into the future, or a schedule activity may represent authorized scope with no corresponding budget. These conditions weaken the PMB even when the total BAC appears correct. The broader Earned Value Management guide explains how scope, schedule and cost work together.
BAC During Proposal Development
Proposal teams often develop a proposed BAC by integrating the statement of work, Work Breakdown Structure, basis of estimate, resource plan and proposal schedule. The proposed BAC should represent the budgeted cost of performing the proposed scope, not the proposed selling price.
However, the negotiated contract, authorized scope and post-award baseline may differ from the proposal. Therefore, teams should not assume that a proposal BAC automatically becomes the contract BAC without reconciliation and formal baseline establishment.
Contractual Requirements Depend on the Contract
BAC is a standard EVMS data concept, but no stand-alone BAC definition creates a contractual requirement by itself. EVMS applicability, reporting frequency, data formats and review requirements depend on the clauses and data items included in the contract.
For civilian agency acquisitions, FAR 52.234-4 requires the contractor to use a compliant EVMS when the clause appears in the contract and to submit reports required by that contract. DoD contracts may instead include DFARS 252.234-7002.
Agency policy, contract value, contract type, acquisition strategy and approved tailoring can affect applicability. Consequently, practitioners should review the actual solicitation or contract rather than treat a general scheduling or EVMS convention as a universal requirement.
Common BAC Mistakes
- Including Management Reserve in BAC. MR remains outside the PMB until formally allocated to authorized work.
- Using BAC as the current forecast. BAC is the baseline budget; EAC is the forecast.
- Equating BAC with contract price. Price may include fee, profit and other elements outside the performance budget.
- Equating BAC with funding. Budget and funding support different management and contractual purposes.
- Changing BAC to hide an overrun. Baseline changes require valid authorization, documentation and traceability.
- Ignoring the reporting level. A control account BAC and total contract BAC represent different collections of scope.
- Failing to reconcile BAC with total PV. At planned completion, cumulative PV should equal BAC for the same reporting level.
- Allowing cost and schedule data to diverge. Budget must remain tied to the same scope and timing represented in the IMS.
Practical Interpretation
BAC is the approved cost benchmark for defined work. Used correctly, it anchors progress measurement, variance analysis and cost forecasting. However, it does not promise that the program will finish for that amount.
Program-controls teams should keep BAC traceable to authorized scope, reconcile it with the PMB and cumulative PV, and maintain MR separately. They should then compare BAC with a current, risk-informed EAC. That comparison gives management a clearer view of whether the baseline remains achievable and what corrective action the remaining work requires.