What does BAC (Budget at Completion) refer to in project management?

Budget at Completion (BAC) refers to the total budget allocated for the entire project. It represents the sum of the approved budgets for all project work and is a critical component in project management as it serves as the baseline against which performance can be measured. By establishing BAC early in the project, project managers can track the overall financial performance, compare planned costs against actual expenditures, and assess any variances that may arise during project execution.

Understanding BAC is fundamental for effective performance measurement techniques such as Earned Value Management (EVM), where it is used to calculate key performance indicators like Cost Performance Index (CPI) and Schedule Performance Index (SPI). These metrics help in evaluating the project's financial health and in making informed decisions for future actions. Therefore, recognizing BAC as the total budget for the entirety of the project is essential for effective planning and financial control throughout the project life cycle.