Glossary
Variance at Completion (VAC)
VAC = BAC − EAC: the most direct signal of whether your project will finish within budget. A practitioner guide to reading Variance at Completion, common misreadings, and why the trend matters far more than a single figure.
Variance at Completion (VAC) vs other EVM variance metrics.
| VAC (Variance at Completion) | CV (Cost Variance) | SV (Schedule Variance) | |
|---|---|---|---|
| Formula | BAC − EAC | EV − AC | EV − PV |
| Looks | Forward — forecast over-/underspend at end of project | Backward — cost performance to date | Backward — schedule performance to date in cost units |
| Positive value means | Forecast underspend (budget headroom) | Under budget on work done | Ahead of plan in cost-equivalent terms |
| Negative value means | Forecast overrun | Over budget on work done | Behind plan in cost-equivalent terms |
| Used by | Project sponsor / steering group — sets escalation triggers | Project manager / cost team — month-on-month performance | Project manager / planning team — early warning of slip |
| Reliability concern | Only as good as the EAC — probe assumptions before relying on it | Fades to zero at project end | Converges to zero at project end (use Earned Schedule for late-stage) |
| Typical reporting cadence | Monthly steering / quarterly board | Monthly cost reports | Monthly cost / schedule reports |
Variance at Completion (VAC) is the most direct expression of whether the project is expected to finish within its approved budget. A positive VAC (BAC exceeds EAC) means the project is forecast to underspend — there is budget headroom. A negative VAC means the project is forecast to overrun the approved budget. VAC gives stakeholders and sponsors an immediate sense of financial exposure at a glance, which is why it typically appears on the first page of any cost performance report. It translates the more abstract EVM metrics into pounds.
VAC is only meaningful if EAC is meaningful. All the caveats about EAC accuracy — quality of earned value measurement, reliability of remaining work estimates, currency of risk register — apply equally to VAC. A VAC of +£2m based on an EAC that has been calculated on gamed EV figures is not reassuring; it is misleading. When reviewing a programme, always probe the EAC assumptions before relying on the VAC headline. The most relevant question is: has EAC been independently challenged, or is it the delivery team's own best-case view of the remaining work?
VAC should be tracked as a trend. A VAC that starts at +£5m, drops to +£3m, then +£1m, then turns negative over several reporting periods is telling you something important: the project is burning through its cost headroom and the trajectory is clearly toward overrun. A single negative VAC reading could be a timing issue or a one-off accrual problem; a trend of deteriorating VAC is a structural signal. Project boards and sponsors should be tracking VAC trend graphs, not just point-in-time readings, and setting trigger thresholds that require formal escalation when VAC trends negative by a defined amount.
Used in practice
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Frequently asked
- What is Variance at Completion (VAC)?
- Variance at Completion is the difference between the project's approved budget and the current forecast final cost: VAC = BAC − EAC. A positive VAC means the project is forecast to underspend (budget headroom). A negative VAC means the project is forecast to overrun the approved budget. It is the headline EVM metric used to communicate financial exposure to sponsors and steering groups.
- How do you calculate Variance at Completion?
- VAC = BAC − EAC, where BAC is the Budget at Completion (the total approved budget) and EAC is the Estimate at Completion (the current forecast final cost). EAC itself can be calculated several ways — formulaic (BAC ÷ CPI for cost-efficiency-based forecasting, or AC + (BAC − EV) for performance-recovery scenarios) or bottom-up. The VAC is only as reliable as the EAC it depends on.
- Is a positive or negative VAC good?
- Positive VAC is good — it means the project is forecast to come in under the approved budget. Negative VAC is bad — it means a forecast overrun, and the size of the negative number tells you the magnitude of the exposure. But VAC needs to be read as a trend: a positive VAC that has been steadily eroding over several reporting periods is a structural signal of cost pressure, even before it turns negative.
- What's the difference between Cost Variance (CV) and Variance at Completion (VAC)?
- Cost Variance (CV = EV − AC) is backward-looking — it tells you whether the work done so far has cost more or less than budgeted. Variance at Completion (VAC = BAC − EAC) is forward-looking — it tells you whether the project is forecast to finish within budget. CV is a snapshot of past cost performance; VAC is the projection of where the project will end up. Both should appear in any EVM report.
Related terms
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