The Budget at Completion (BAC) is the sum of the budget for each phase of your project. This is the estimated grand total of your project. If a project manager breaks down a project into phases, and she should, then each phase can be reflected with a dollar amount that needs to be allotted to that phase. The benefit of this approach is that a company does not need to allot all of the BAC at the project’s conception, but rather the initial amount required to set the project in motion, and an amount as each phase is completed.

As you can see, this approach to budgeting allows all parties to get a sense of what each phase will cost, when the monies will need to be allocated (in advance of the implementation date, of course), and the total cost of the project. This cash flow approach to project management creates a cooperation between the project manager, the project customer, and management. The project manager should include phases that do not require any outlay of cash. In some situations, you may be required to add the number of hours estimated to complete each phase of the project to factor in the cost of an employee’s or a consultant’s time. The preceding sample only shows the hardware expense.