Contract Target Cost (CTC)
EVM Terms
Reviewed by forProject Technology - updated Sep 2026
Quick definition: Contract Target Cost (CTC), also called Negotiated Contract Cost, is the negotiated cost of the original contract plus all definitized contractual changes, excluding any authorized but unpriced changes.
CTC equals the Budget at Completion plus Management Reserve — in other words, it's the full negotiated cost baseline, including the reserve held back by management rather than distributed to the work. It updates as contract changes get formally negotiated and definitized.
Why it matters
CTC is the starting point for calculating Contract Target Price on incentive-type contracts, where target cost plus target fee determines the baseline used to share cost underruns or overruns between contractor and customer. It's a foundational number in contract-level EVM reconciliation.
Also known as
Negotiated Contract Cost (NCC)
Used in
CTC = Budget at Completion (BAC) + Management Reserve (MR); Contract Target Price (CTP) = CTC + target profit/fee
FAQ
Does CTC include unpriced changes?
No — it includes only changes that have been negotiated and definitized; the estimated cost of authorized but unpriced changes is tracked separately.
How does CTC relate to BAC?
CTC is larger than BAC by the amount of Management Reserve, since BAC covers only the budget assigned to the work scope and excludes the reserve.
Definition maintained by forProject Technology.
© 2026 forProject Technology, Inc.
© 2026 forProject Technology, Inc.
