Finding the Estimate at Completion

One of the most fundamental forecasting formulas is the estimate at completion (EAC). This formula accounts for all those pennies you're losing on every dollar if your CPI is less than one. It's an opportunity for the project manager to say, "Hey! Based on our current project's health, this is where we're likely to end up at the end of the project. I'd better work on my resume." Let's take a look at these formulas.

EAC Using a New Estimate Just like the estimate to complete formulas, sometimes it's best just to create a whole new estimate. This approach with the EAC is pretty straightforward—it's the actual costs plus the estimate to complete. Let's say your project has a budget of \$500,000 and you've already spent \$187,000 of it. For whatever reason, you've determined that your estimate is no longer valid and your ETC for the project is actually going to be \$420,000—that's how much you're going to need to finish the project work. The EAC, in this instance, is the actual costs of \$187,000 plus your ETC of \$420,000, or \$607,000.

EAC with Atypical Variances Sometimes, there are anomalies within a project that can skew the project's estimate at completion. The formula for this scenario, as Figure 7-13 demonstrates, is the actual costs plus the budget at completion minus the earned value. Let's try it out. Your project has a BAC of \$500,000 and the earned value is \$100,000. However, you've spent \$127,000 in actual costs. The EAC would be \$127,000+\$500,000-\$100,000, or \$527,000. That's your new estimate at completion for this project.