Estimate at Completion (EAC)
Estimate at Completion (EAC) is the expected total cost of completing all work, calculated by projecting current performance into the future.
Explanation
EAC is a forecast of the most likely total cost of the project based on current performance data. There are four common formulas for calculating EAC, each used under different assumptions.
1. EAC = AC + (BAC - EV) / CPI — Used when current cost performance is expected to continue. This is the most commonly used formula. 2. EAC = AC + (BAC - EV) — Used when future work will be accomplished at the budgeted rate, regardless of past performance (atypical variance). 3. EAC = AC + Bottom-up ETC — Used when the original estimate is fundamentally flawed and a new estimate is needed for remaining work. 4. EAC = AC + (BAC - EV) / (CPI x SPI) — Used when both cost and schedule performance are expected to influence remaining work.
The choice of formula depends on the project manager's assessment of what factors will influence the remaining work. EAC is compared to BAC to determine whether the project will finish over or under the original budget. If EAC exceeds BAC, the project is projected to finish over budget.
Key Points
- •Most common formula: EAC = BAC / CPI (equivalent to AC + (BAC - EV) / CPI)
- •Atypical variance: EAC = AC + (BAC - EV)
- •New estimate: EAC = AC + Bottom-up ETC
- •Cost and schedule influence: EAC = AC + (BAC - EV) / (CPI x SPI)
Exam Tip
Know all four EAC formulas and when to use each. The most common is EAC = BAC / CPI. If the question says past variances were atypical, use EAC = AC + (BAC - EV).
Frequently Asked Questions
Related Topics
Estimate to Complete (ETC)
Estimate to Complete (ETC) is the expected cost needed to finish all remaining project work from the current point in time.
Variance at Completion (VAC)
Variance at Completion (VAC) is the projected difference between the budget at completion and the estimate at completion: VAC = BAC - EAC.
Cost Performance Index (CPI)
Cost Performance Index (CPI) is an EVM efficiency metric that measures cost performance as the ratio of earned value to actual cost: CPI = EV / AC.
To-Complete Performance Index (TCPI)
The To-Complete Performance Index (TCPI) is a measure of the cost performance that must be achieved on remaining work to meet a specified management goal, either the BAC or EAC.
Test your knowledge
Practice scenario-based questions on this topic with detailed explanations.