%Vac Project Management%
Project managers are responsible for planning and managing projects within a budget. They must be proficient in various analytical tools and master different PMP(r), techniques to accomplish this. One of these is the ability to calculate the Variance At Completion (VAC) Project Management.
You are here because you want to learn more about project management if you are an aspiring manager. Continue reading to learn more about VAC Project Management and why it is important for you.
Photo by fauxels at Pexels
What is VAC Project Management?
VAC Project Management is a tool for analysis under Variance Analysis and Earned Value Management.
You may be wondering what Earned Value Management is. It is an estimation technique that measures the project’s performance using the integration of costs and schedule.
Before we get into the details of VAC project management, it is important to understand what Variance means. Variance in project management shows you the expected change to a baseline or standard.
When we refer to VAC Project Management, it is an evaluating tool that measures the budget surplus and deficit. The VAC calculation results give you an overview of the result, including whether there will be an excess or shortage, and how much it will change.
It is a quantitative indicator which shows the amount of change at the end compared to the initial budget. VAC does not care about the cost variance in your project. VAC will not show the difference between your actual and earned value.
VAC shares some functional similarities with a cost variance calculation. VAC is a status snapshot that is not used in Standard Project Management as an input.
The outcome will determine whether your budget is overrun or underfunded. The ideal VAC value is one that is close to zero. This is because the greater the difference between zero and the VAC value, then the larger the margin of error.
BAC versus EAC for VAC Project Management
We have already discussed that VAC can be calculated using both BAC as well as EAC in project management.
BAC stands for Budget At Completion. It is the estimated budget for the project based upon WBS or Work Breakdown Structure. BAC, which is simply the sum of all costs for the project, is also known as WBS. BAC is calculated at the beginning of any project to plan it based on its components. As the project progresses, the BAC budget will need to be recalculated based upon the forecasted budget at project’s end.
EAC, which stands to Estimate at Completion (or EAC), is the budget forecast for the project in progress. EAC, which is simply the expected budget for the current project based on total costs, is simply that.
EAC, however, takes into account variables like unplanned costs and incorrect early estimates, which is not the case with BAC. EAC is evaluated in ongoing projects to allow stakeholders sufficient time to make data-driven decision.
The responsibility of a project manager is to determine VAC from BAC or EAC and communicate effectively with stakeholders about any necessary changes.
When to use VAC in Project Management
Budget overruns are a no-no, no matter how small or large the project is. To know the estimated budget at completion of a project, every project manager uses VAC.
A Variance at Completion refers to the difference between Estimate at Completion and Budget at Completion. This cost management technique is flexible and can be used at any time until the end of a project. The current execution costs are subtracted from the initial budget to create the estimated forecast.
It gives you an idea of the project’s budget limit when you calculate VAC during project execution. If the r