Budget at Completion (BAC)

Budget at Completion (BAC) is the total authorised budget for the entire project scope, established at baseline. It is the denominator in several key EVM calculations: Estimate at Completion (EAC), To-Complete Performance Index (TCPI), and others. BAC represents what the project was supposed to cost if delivered exactly to plan — it is the performance measurement baseline expressed as a single number. It does not include management reserve, which is held outside the project budget by the sponsor. BAC is the ceiling that the project manager is managing within.

BAC is established as part of the baselining process and should not change unless there is a formal change to the approved scope. Budget transfers between work packages (known as internal re-planning or budget reallocation) do not change BAC — they redistribute it. A formal scope change that is approved and incorporated into the performance measurement baseline does change BAC, and the change should be documented through the change control process with a new baseline revision. Projects that see BAC changing frequently without formal change documentation are either managing scope poorly or using budget reallocation to hide cost variances.

The relationship between BAC and contingency is important to understand. BAC represents the budget for the agreed scope. Contingency sits above BAC (or as a separate line) and covers identified risks that have not yet materialised. If a risk materialises and is incorporated into the project scope through a formal change, the contingency used to fund that change is added to BAC, and the performance measurement baseline is updated. Projects that draw down contingency without updating BAC are obscuring the true cost picture and making EVM metrics progressively less meaningful as the project progresses.