Earned Value Management AC and BAC – Step 2

Posted on March 2, 2009 by


An earlier posting described the concept of Earned Value—the idea that accomplished work has value, even if the work is incomplete. There are a number of formulas and acronyms to know when applying Earned Value Management (EVM). A couple more will be introduced here. Actual Cost (AC) and Budget at Completion (BAC) are two basic concepts to understand. AC is how much money you’ve actually spent at this point in time (not planned to spend, meant to spend, wanted to spent, but really and truly actually have spent). BAC is how much money has been budgeted for the entire project. So if Benjamin is part-way through managing a project that has been allotted ten thousand dollars, and as of today he’s spent seven thousand on the project, the BAC is ten thousand dollars and the AC is seven thousand dollars. The term AC is used in formulas to calculate whether a project is on-budget, how much value is being obtained for the cost, and how much more the project will cost. The term BAC is used in formulas to calculate how much the total project will cost, how much more the project will cost, and the difference in how much the project was supposed to cost compared to what it actually will cost.