PMP Formula of the Week: What is BAC?

What does BAC determine?

A. The funding limitation for the project
B. The sum of the original budget and approved changes
C. EAC
D. The acceptable range of budget variability

Reveal Answer

The correct answer is B.

BAC, or Budget at Completion, determines the sum of the original budget and approved changes.

Determining a funding limitation for the project, answer A, is incorrect because project funding limitation is defined by senior management, and the BAC is a specific value used in earned value computations.

Determining EAC (Estimate at Completion), answer C, is incorrect because for BAC to equal EAC at the end of the project all changes must be approved, execution must include absolutely no scope creep or gold plating and maintain an average productivity rate of 100 percent throughout the project.

Defining the acceptable range of budget variability, answer D, is incorrect because BAC represents the approved budget at completion and is used in earned value forecast calculations. The range of acceptable cost performance variation is established within the project management plan.

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Related Courses
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PMP Formula of the Week Series

• PMP Formula of the Week: Forecasting a Necessary CPI
• PMP Formula of the Week: Forecasting a Necessary CPI Based on an ETC
• PMP Formula of the Week: Ahead or Behind Schedule
• PMP Formula of the Week: Point of Total Assumption
• PMP Formula of the Week: Rent, Lease or Buy?
• PMP Formula of the Week: Risky Task
• PMP Formula of the Week: Earned Value Management Methodology
• PMP Formula of the Week: Schedule Performance Index of 1
• PMP Formula of the Week: TCPI
• PMP Formula of the Week: Fixed-Price Incentive Fee Contract
• PMP Formula of the Week: S-Curve
• PMP Formula of the Week: Current Project Status
• PMP Formula of the Week: Project Schedule Information
• PMP Formula of the Week: Random Defective Article
• PMP Formula of the Week: Confidence Level
• PMP Formula of the Week: EV?
• PMP Formula of the Week: What is BAC?

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