Blog · Territory, capacity and quota planning · Construction
Budget at completion is the approved cost baseline for the full project scope. Work through a construction example that reconciles original budgets, authorized changes, actual costs and remaining commitments without confusing the baseline with the forecast.
To calculate budget at completion, add the approved cost budgets for all the work in the project baseline. The result, BAC, is the authorized cost target for completing that scope. Actual spending, open purchase orders and the latest remaining-cost estimate help assess that target; they do not define it.
Budget at completion (BAC) = Sum of approved baseline cost budgets for the entire project scope
Current BAC = Original BAC + Authorized baseline increases − Authorized baseline reductions
The Department of Energy's EVMS Gold Card defines BAC as the sum of budgeted cost for work scheduled. That means the full baseline through completion, rather than only the work scheduled before today's reporting cutoff.
Use the same scope and cost basis throughout. Labor, materials, subcontract costs and allocated project overhead belong where the approved baseline places them. Do not add customer revenue or the contractor's profit to a cost baseline.
In the example below, every baseline dollar is assigned to a work package. If your project also has approved planning packages or undistributed budget, include those baseline amounts exactly once. Summing only detailed work packages would otherwise understate BAC.
Request the budget register with project ID, work-package ID, cost code, original budget, approved change amount, approval reference and current baseline version. A change register should distinguish approved changes from requests still under review. Retain the approval date so a later revision does not enter an earlier reporting period.
Use cost amounts throughout the register. A customer change order's selling price is not automatically the budget increase needed to perform the work. Require the corresponding authorized cost estimate and identify any fee separately.
Join actual costs and commitments using the same project and work-package keys, but preserve them as separate measures. The detailed process for that review belongs in construction budget analysis. Establishing BAC comes first: without a reliable baseline, a cost variance has no stable reference.
A US general contractor is completing a warehouse fit-out. Its original approved cost baseline is fully distributed across the following packages. By September 30, 2026, the project has authorized additional mechanical and finish work.
All amounts are USD, shown to the nearest dollar. The example uses whole-dollar inputs, so no rounding adjustment is needed.
| Work package | Original budget (USD) | Approved cost changes (USD) | Current BAC (USD) |
|---|---|---|---|
| Sitework | 180,000 | 0 | 180,000 |
| Structure | 420,000 | 0 | 420,000 |
| Mechanical and electrical | 300,000 | 40,000 | 340,000 |
| Finishes | 100,000 | 10,000 | 110,000 |
| Total | 1,000,000 | 50,000 | 1,050,000 |
Each current package budget equals its original budget plus approved changes. The project calculation is:
BAC = 1,000,000 + 50,000 = 1,050,000
If columns B and C contain the original and change amounts, enter =B2+C2 in D2 and fill through D5. The baseline total is =SUM(D2:D5). Independently check it with =SUM(B2:B5)+SUM(C2:C5); the difference between those totals must be zero.
Suppose another cost change of $30,000 is pending. Keep it in the exposure review, with its status visible, rather than inserting it into the approved-change column. The current BAC remains $1,050,000 until the relevant authority approves a baseline revision.
The arithmetic tie is necessary, but it does not establish authorization. Reconcile the total to the signed baseline summary and its change register. Every increase should have an approval reference; every deletion should have an explanation. Check that the same change does not appear both as a new package and an increase to an existing package.
The company separately holds management reserve outside the baseline:
| Authorization component | Amount (USD) |
|---|---|
| Approved performance baseline: BAC | 1,050,000 |
| Management reserve | 75,000 |
| Baseline plus reserve | 1,125,000 |
The combined amount is $1,050,000 + $75,000 = $1,125,000. Label it as the baseline plus reserve, rather than BAC.
DOE's management reserve guidance prohibits using reserve to conceal performance problems or eliminate historical variances. A reserve balance therefore does not justify rewriting an overrun out of the report. Track authorized reserve movements and baseline changes explicitly.
A flexed budget answers a separate activity-adjustment question. Do not substitute one for the approved project baseline without explaining the different purpose and obtaining the required authorization.
The contractor now supplies ledger costs, open commitments and delivery owners' estimates of uncommitted remaining work. Open commitments below exclude amounts already incurred. Uncommitted estimates exclude everything in the commitment column.
| Work package | Actual cost (USD) | Open commitments (USD) | Uncommitted remaining cost (USD) | Estimated final cost (USD) | BAC less estimated final cost (USD) |
|---|---|---|---|---|---|
| Sitework | 160,000 | 10,000 | 50,000 | 220,000 | -40,000 |
| Structure | 260,000 | 20,000 | 180,000 | 460,000 | -40,000 |
| Mechanical and electrical | 120,000 | 150,000 | 70,000 | 340,000 | 0 |
| Finishes | 40,000 | 50,000 | 10,000 | 100,000 | 10,000 |
| Total | 580,000 | 230,000 | 310,000 | 1,120,000 | -70,000 |
Estimated final cost is $580,000 + $230,000 + $310,000 = $1,120,000. BAC is still $1,050,000, leaving a forecast overrun of $70,000. The last column uses the favorable-positive convention: BAC minus estimated final cost.
Check the same gap another way. Budget less actual cost is $1,050,000 − $580,000 = $470,000. Expected remaining cost is $230,000 + $310,000 = $540,000. The difference is again −$70,000.
That identity proves the comparison's arithmetic. It does not prove the remaining estimates are complete. The site manager must support unfinished quantities and delivery assumptions. For progress-based measures and alternative forecasting assumptions, use the separate guide to earned value, CPI, SPI and estimate at completion.
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It can change through authorized baseline revisions, such as an approved scope addition. Keep the original budget and a dated change bridge. A higher forecast cost alone does not authorize a higher baseline or erase the variance.
No. Contract price can include profit or fees, while BAC measures budgeted cost for the defined scope. Owner contingency and contractor management reserve can also sit outside the performance baseline. Label each amount before comparing them.
Actual costs cannot establish the approved baseline. Obtain the authorized budget register instead. Actuals and a remaining-cost estimate produce an estimate at completion, which is useful for comparison but answers a different question.
BAC describes the full cost target, not physical progress. A project can have substantial spending with little accepted work. Delivery owners must provide milestone, quantity or other completion evidence before finance interprets earned-value performance measures.