How is backlog calculated?

Backlog is the difference between your contracted fees and your Earned Value.

But what about hourly and cost-plus billing contracts that have an open-ended target? In this case, you should set a target amount that you believe will be the resulting value of the final billings. Yes, this is a moving target that will need to be adjusted from time to time as you navigate through a project. And to those who say that they have no idea where the project will end up, we say, take your most educated guess - you know that it is more than $1 and likely less than $1,000,000 so find the value that you feel most comfortable with.