Variance at Completion (VAC): Budget Deficit or Surplus Projection
PMBOK v8 Definition
Variance at Completion (VAC) is a projection of the amount of budget deficit or surplus, expressed as the difference between the budget at completion (BAC) and the estimate at completion (EAC). It answers the question: "At the end of the project, will we be under or over our planned budget?"
Formula: VAC = BAC − EAC
- Positive VAC = Under planned cost (favorable)
- Neutral VAC = On planned cost
- Negative VAC = Over planned cost (unfavorable)
Why It Matters for the Exam
VAC appears frequently in PMI exam questions on earned value management (EVM) and cost control. It tests your ability to forecast final project cost performance. Expect questions that ask you to calculate VAC from given BAC and EAC values, or to interpret what a specific VAC value means for project completion.
Key Points to Remember (for the exam)
- Definition: VAC projects the total budget variance at project completion—not at a point in time.
- Formula: VAC = BAC − EAC (memorize this exactly)
- Positive VAC: The project is projected to finish under the planned cost (budget surplus).
- Negative VAC: The project is projected to finish over the planned cost (budget deficit).
- Zero VAC: The project is projected to finish exactly on budget.
- Relationship to BAC: BAC is the total planned budget (cost baseline); VAC compares the final estimate to that baseline.
- Common Confusion: VAC is often confused with Cost Variance (CV) . CV measures variance at a point in time (CV = EV − AC), while VAC projects variance at the end of the project.
Typical PMI Exam Example
Your project has a Budget at Completion (BAC) of $500,000. Based on current performance, the Estimate at Completion (EAC) is $550,000. What is the Variance at Completion (VAC)?
Calculation: VAC = BAC − EAC = $500,000 − $550,000 = −$50,000
Interpretation: The project is projected to finish $50,000 over the planned cost (negative VAC = unfavorable).
PMI Exam Traps
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Trap: Confusing VAC with CV (Cost Variance)
- Reality: CV = EV − AC (variance at a point in time); VAC = BAC − EAC (projection at completion)
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Trap: Thinking a positive VAC is always bad
- Reality: Positive VAC means under planned cost—this is favorable (budget surplus)
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Trap: Using the wrong formula (e.g., VAC = EAC − BAC)
- Reality: The formula is VAC = BAC − EAC (reverse of what many assume)
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Trap: Forgetting that VAC requires both BAC and EAC
- Reality: You cannot calculate VAC without knowing both the planned budget (BAC) and the estimated final cost (EAC)
Important PMI Connections
| Related Concept | Relationship Type | Exam Attention Point |
|---|---|---|
| Budget at Completion (BAC) | Direct input to VAC | BAC is the cost baseline; VAC compares against it |
| Estimate at Completion (EAC) | Direct input to VAC | EAC is the projected final cost; VAC = BAC − EAC |
| Cost Variance (CV) | Complementary metric | CV measures current variance; VAC projects final variance |
| Variance Analysis | Technique that uses VAC | Variance analysis reviews VAC along with other variances (cost, time, technical) to determine causes and corrective actions |
Quick Review Questions
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A project has BAC = $200,000 and EAC = $180,000. What is the VAC, and is it favorable or unfavorable?
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If VAC is −$25,000, what does this indicate about the project's projected final cost compared to the budget?
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What is the difference between VAC and CV in terms of the time period they measure?
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A project manager calculates VAC = $0. What does this mean for the project completion?
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Which two EVM metrics are required to calculate VAC?
PMBOK v8 Reference
Section 5 – Tools and Techniques, Variance Analysis (page 207)