Variance at Completion (VAC)
Variance at Completion (VAC) is the projected difference between the budget at completion and the estimate at completion: VAC = BAC - EAC.
Explanation
VAC forecasts the expected budget surplus or deficit at the end of the project. A positive VAC indicates the project is projected to finish under budget, while a negative VAC indicates it will finish over budget. A VAC of zero means the project is expected to finish exactly on budget.
The formula is VAC = BAC - EAC. For example, if the BAC is $500,000 and the EAC is $550,000, then VAC = -$50,000, meaning the project is forecast to be $50,000 over budget at completion.
VAC provides a simple, quick assessment of overall project cost health. It is useful for reporting to stakeholders and for making decisions about whether corrective action is needed. VAC should be evaluated alongside CPI and other metrics for a complete picture of cost performance.
Key Points
- •Formula: VAC = BAC - EAC
- •Positive VAC = projected under budget; negative VAC = projected over budget
- •Provides a quick summary of expected cost outcome
- •Used for stakeholder reporting and corrective action decisions
Exam Tip
VAC = BAC - EAC. Positive is good (under budget at completion). This is a straightforward formula but be sure to calculate EAC correctly first.
Frequently Asked Questions
Related Topics
Estimate at Completion (EAC)
Estimate at Completion (EAC) is the expected total cost of completing all work, calculated by projecting current performance into the future.
Cost Variance (CV)
Cost Variance (CV) is an EVM metric that measures cost performance as the difference between earned value and actual cost: CV = EV - AC.
Cost Performance Index (CPI)
Cost Performance Index (CPI) is an EVM efficiency metric that measures cost performance as the ratio of earned value to actual cost: CPI = EV / AC.
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.