How is BAC calculated in project management?

Determine Budget at Completion (BAC) The PMBOK® Guide gives this definition of BAC: “the sum of all budgets established for the work to be performed.” At the most basic level for example, if the original project budget is $25,000, then the project’s BAC is $25,000.

What is BAC in project management?

Definition: Budget at Completion (BAC) is the total of all budget values that have been previously established for all the work to be completed on a project.

How do you calculate EAC and Bac?

They are as follows:

  1. Formula 1. EAC = AC + Bottom-up ETC. This formula is used when the original estimation is fundamentally flawed. …
  2. Formula 2. EAC =BAC/Cumulative CPI. …
  3. Formula 3. EAC = AC + (BAC – EV) …
  4. Formula 4. EAC = AC + [BAC – EV / (Cumulative CPI x Cumulative SPI)]

Is BAC the same as planned value?

PV represents the approved value of what should have completed up to a specific point in time, whereas BAC represents the total PV for your project. Think of Planned Value as the incremental budgeted portion for a particular event and the Budget at Completion as the total budget (the sum of all budgets in PMBOK-speak).

What is BAC vs EAC?

Estimate at Completion (EAC) is the current expectation of total cost at the end of a project. The EAC represents the final project cost given the costs incurred to date and the expected costs to complete the project. EAC is the expected spend where BAC (budget at completion) is the authorized spend on a project.

How do you calculate BAC earned value?

The Formula for Earned Value (EV)

The formula to calculate Earned Value is also simple. Take the actual percentage of the completed work and multiply it by the project budget and you will get the Earned Value. Earned Value = % of completed work X BAC (Budget at Completion).

How do you complete BAC?

Determine Budget at Completion (BAC)

  1. Determined at project start based on work planned.
  2. Used with Planned Value (PV) to determine budget’s status against planned.
  3. Compared to Estimate at Completion (EAC) at point of analysis based on expected future work.
  4. Expressed in cost units (any currency)

What if EAC is higher than BAC?

If the actual costs at time now (i.e., ACWPcum) are higher than the earned value at time now (i.e., BCWPcum), we know that the contractor is currently over running cost and that the contractor’s Estimate at Completion (EAC) may be higher than the BAC.

How is EAC calculated example?

Example 1 – Calculated with an Estimate to Complete

In this example, the Estimate to Completion (ETC) amounts to 130. Thus, the EAC is: EAC = AC + ETC = 120 + 130 = 250. The re-estimated EAC exceeds the planned budget at completion by 50.

How do you calculate EAC for a project?


In this case, we can use the EAC = AC + (BAC – EV) formula because we expect that the remaining budget is accurate but must account for the previous performance issues. Essentially, the EAC increases by the amount the actual cost exceeded the initial budget.

How do you calculate planned values in Excel?

How to organise your other earned value calculations in excel

  1. Cost variance = Earned value – Actual cost. …
  2. Schedule variance = Earned value – Planned value. …
  3. PV = % of project completed (planned) x Budget at completion (BAC)

How do you calculate CPI from PMP?

Using the formula CPI = EV / AC, the project manager will have a value of less than 1 (project over budget), of 1 (project on budget), or greater than 1 (project under budget). CPI in project management measures the cost efficiency of a project.

How do you calculate the value of a project?

You can calculate the EV of a project by multiplying the percentage complete by the total project budget. For example, let’s say you’re 60% done, and your project budget is $100,000 — your earned value is then $60,000.

What formulas are used in project management?

Cost Management Knowledge Area PMP Formulas

1 Cost Variance (CV) = Earned Value (EV) – Actual Cost (AC)
2 Schedule Variance (SV) = Earned Value (EV) – Planned Value (PV)
3 Cost Performance Index (CPI) = EV / AC
4 Schedule Performance Index (SPI) = EV / PV
5 EAC = AC + Bottom-up ETC

What is BAC in EVMS?

Budget at Completion (BAC) is the total budget allocated to the project. BAC is generally plotted over time. For example, periods of reporting (Monthly, Weekly, etc.) BAC is used to compute the Estimate at Completion (EAC), explained in the next section.

What does BAC mean and what knowledge area does the project manager need to have to be able to develop it?

Budget at Completion (BAC): The total of all task budgets, i.e. the project budget. Cost Performance Index (CPI): The cost variance expressed in percentage terms, for example, CPI = 1.2 means the project is 20% over budget.

What is cost performance index in project management?

The cost performance index (CPI) is a measure of the conformance of the actual work completed (measured by its earned value) to the actual cost incurred: CPI = EV / AC. The schedule performance index (SPI) is a measure of the conformance of actual progress (earned value) to the planned progress: SPI = EV / PV.

How do you calculate actual cost?

Actual production cost per unit: Take the sum of the actual material, labor and overhead cost, then divide it by the number of units produced. This calculation measures how much it costs to produce each unit.

What is the Tcpi for the project using the BAC?

The TCPI to bring the project in on the BAC is the ratio of the value of the remaining project work, per PMI’s definition [BAC minus earned value (EV)], all divided by the amount of the remaining funds [BAC minus actual cost (AC)]. This formula works out to be: TCPI = (BAC – EV) ÷ (BAC – AC).

What if Tcpi is less than 1?

TCPI < 1 – it means that project has more funds and less work. It is easier to complete the project.

How do you explain Tcpi?

To Complete Performance Index (TCPI) Defined

A measure of the cost performance that is achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.