Advanced Terminology

What is BAC (Budget at Completion) in Project Management?

Budget at Completion (BAC) is a degree that is regularly utilized in earned price control to tune the real price of a project towards its forecasted price range. It is calculated at the beginning of a project-primarily based totally on the project work and its personal additives.
The PMBOK defines BAC as “the sum of all budgets installed for the work to be performed.” In easy terms, the BAC is the full price range that has been predicted for all the work that wishes to be finished over the project’s duration.

It may be used along the Planned Value (PV) metric to decide whether the project’s price range is heading in the right direction primarily based totally on a particular factor in its lifecycle. For example, if the project’s BAC is $120,000 and it is far 20% of the manner done, you will calculate Planned Value via a means of multiplying $120,000 x 20% = $24,000.

BAC project management example

Let us say you are making plans to project management a simple eight-week lengthy kitchen redecorate. You have a difficult concept of the charges related to this redecorate due to the fact you have finished comparable initiatives withinside the past.

How to decide Budget at Completion (BAC)

Because BAC is the sum of all budgets withinside the project, it is far more effective logically that there may be a technique of arriving at those figures. Different strategies for figuring out Budget at Completion encompass professional judgment, parametric judgment, analogous estimation.

Parametric estimation

As PMI explains, parametric estimation “makes use of statistical courting among ancient statistics and different variables” to reach correct estimates of the price range, price, and project length.

Expert judgment

Expert judgment is precisely what it sounds like. To create a project price range, estimate the usage of this method, seek advice from professionals and specialists acquainted with the character of your project, its limitations, and its numerous additives and charges.

Analogous estimation

Analogous estimation arrives at a project price range estimate primarily based totally on revel in with some other, comparable projects. For example, your agency recently finished an academic gaming app within six months at a price range of $180,000.

Now, you have been approached via means of some other agency that desires to make a comparable app in a comparable timeframe. Analogous estimation could then expect that the sort of project will be finished in a comparable quantity of time —though different variables may also rise, and this can now no longer usually be the case.
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