The Budget at Completion (BAC) represents the total approved budget for a project. It is the sum of all planned expenditures intended to cover the entire project scope. To arrive at this figure, one must consider all direct and indirect costs, including labor, materials, equipment, and overhead. For example, if a construction project’s approved budget allocates $500,000 for materials, $300,000 for labor, and $200,000 for overhead, then the BAC is $1,000,000.
Establishing a precise figure for total planned project costs is crucial for effective project management. This benchmark enables comparison against actual costs incurred throughout the project lifecycle, facilitating variance analysis and early identification of potential overruns. Early detection of potential cost issues allows for proactive corrective actions, helping to maintain project financial viability. Moreover, this total approved expenditure amount plays a vital role in forecasting future financial requirements and in assessing the overall return on investment for the project.