Variance at Completion (VAC) is an essential metric in UK property development finance, measuring the difference between the original budget and the forecasted total cost of a development project. It is calculated by subtracting the estimated final expenditure from the planned budget. VAC offers property developers and lenders valuable insight into potential cost savings or overruns, highlighting financial risks and efficiency. A positive VAC suggests forecasted savings, while a negative VAC indicates expected additional costs. This metric supports effective cash flow management, risk assessment, and decision-making throughout the development process.
This sits beneath Time Efficiency, introducing a more specific variant of the measure without changing its core interpretation. In funding terms, Variance at Completion (VAC) is most commonly encountered in connection with Development Management Fee -> Converted to Equity within the property development capital stack.
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