Budget at Completion vs Estimate at Completion for PMP

BAC and EAC: Two Cost Benchmarks Every PMP Must Distinguish

Budget at Completion and Estimate at Completion are two of the most referenced values in PMP cost management, and confusing them is one of the most common errors candidates make. They answer similar but different questions: BAC asks "how much did we plan to spend?" and EAC asks "how much do we now think we will actually spend?" Understanding the relationship between these two values — and when EAC deviates from BAC — is critical for both the exam and real project management.

Budget at Completion (BAC)

BAC is the total planned value of all work on the project. It is the sum of all budgets established for the project work and represents the performance measurement baseline. BAC is set during planning and does not change unless the scope baseline is formally revised through integrated change control.

Key Characteristics

• BAC is a planned value — it reflects the original cost baseline.
• BAC does not change based on project performance. A project that is 50% over budget still has the same BAC.
• BAC changes only when the cost baseline is formally revised (scope changes, re-baselining).
• At the end of the project, total Planned Value (PV) equals BAC.

Estimate at Completion (EAC)

EAC is the expected total cost of the project based on current performance data. It replaces BAC as the working cost forecast once the project is underway and performance data reveals that the original budget may not hold.

Key Characteristics

• EAC is a forecast — it reflects reality, not the plan.
• EAC changes as project performance data updates.
• Multiple formulas exist for calculating EAC, each based on different assumptions about future performance.
• When EAC equals BAC, the project is on track to finish on budget. When EAC exceeds BAC, the project will overspend.

How BAC and EAC Relate

Several EVM formulas connect BAC and EAC directly:

• EAC = BAC / CPI — adjusts BAC by cost performance efficiency.
• VAC = BAC − EAC — the gap between the plan and the forecast.
• TCPI = (BAC − EV) / (BAC − AC) — the efficiency needed to meet BAC.

When CPI = 1.0, EAC equals BAC — the project is performing exactly as planned. When CPI drops below 1.0, EAC exceeds BAC, and the gap (VAC) represents the projected overrun.

When Does EAC Replace BAC?

BAC never disappears — it remains as the baseline for comparison. But once a project enters execution and cost performance data is available, stakeholders and sponsors focus on EAC because it reflects the realistic forecast. In status reports and earned value analyses, EAC becomes the number that drives decision-making about funding, scope adjustments, and project continuation.

PMP Exam Scenarios

The exam tests BAC vs EAC understanding through scenarios like these:

1. "The project budget is $500,000." This is BAC — the approved budget.
2. "Based on current performance, the project will cost $575,000." This is EAC — the revised forecast.
3. "What is the projected overrun?" VAC = BAC − EAC = $500,000 − $575,000 = −$75,000.
4. "Should we re-baseline?" Only if a formal change request is approved. EAC changing does not automatically change BAC.

Common PMP Traps

• Treating BAC and EAC as interchangeable — they are not.
• Assuming poor performance changes BAC — it does not; only formal baseline changes affect BAC.
• Using EAC in a TCPI formula when the question asks about meeting the original budget (use BAC) or vice versa.

Drill the distinction with practice questions that require choosing between BAC and EAC in formulas. Start your free trial for full access to our EVM question bank.