Budget at Completion Calculator: What is BAC and How to Use it
Budget at Completion (BAC) – just hearing those three words might make you break into a cold sweat if you've been navigating the labyrinth of formulas for the PMP exam. As a savvy millennial in the world of project management, you know that keeping track of all those formulas can feel like juggling flaming swords.
But don’t worry, because amidst the chaos, the BAC formula is something like a lifeline compared to the others. It's not just another formula to memorize; it's probably the easiest one to remember and use.
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Budget at Completion Calculator
To emphasize the simplicity of the BAC formula compared to its counterparts in the PMP exam, we could highlight its straightforwardness.
While other formulas might require intricate calculations or convoluted steps, the budget at completion formula stands out. It doesn't demand complex mathematical prowess or hours of memorization; instead, it offers a clear and concise method for assessing project budgets.
However, calculating the BAC does require supreme estimating skills. The budget at completion calculator is as simple as summing the total of all budgets required to complete a project.
In my previous world of working budgets for the design and construction of restaurants, it was fairly easy to calculate the budget at completion based on the brand and size of the restaurant.
It’s easier to estimate the cost of previous similar projects. This smart guessing game is called analogous estimating, and let me tell you, it's like having a cheat code for budgeting.
But when we were tackling something totally new, like a restaurant with a wild design or special features, we had to switch gears. Using different methods to make sure we didn't blow the budget.
One way is called parametric estimating, where we use past data and specific project details to make our best guess. Then there's bottom-up estimating, where we break the project into tiny pieces and add up all the costs. It's like building a puzzle to figure out the big picture.
So, whether we were keeping it simple with the usual suspects or diving into the unknown, there’s always a way to keep those budgets in check.
How to use budget at completion calculator to assess project budgets:
Let's say you're overseeing the design and construction of a new restaurant. A similar size and build of what you’ve done in the past.
Or, a one that you haven’t. You’ve calculated the BAC based on the budget for all work required to complete the project.
Let’s also say it’s a small restaurant with the project's BAC set at $150,000, and it's currently 25% complete.
Now, envision calculating the Planned Value (PV) for this stage. Simply multiply $150,000 by 25%, which yields a Planned Value of $37,500.
This straightforward calculation illustrates how the BAC formula effortlessly integrates with the project's progress, offering a clear snapshot of its financial health.
Wrapping things up…
Whether you're overseeing the construction of a trendy new restaurant or embarking on a project of your own, understanding BAC can be your secret weapon for staying on track financially.
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By, Airess Rembert, PMP, Member of Women Of Project Management & Blogger at The Nerd Bae
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