Info

Actual Costs $127,000 \

Budget at Completion $500,000

\

Earned Value

$100,000

-►

„-r

Estimate at Completion $527,000

Estimate at Completion $527,000

Figure 7-13 The EAC can also account for anomalies in a project's expenses.

EAC Using the CPI If a project has a CPI of .97, you could say the project is losing three pennies on every dollar. Those three pennies are going to add up over time. This approach is most often used when the project manager realizes that the cost variances are likely going to continue through the remainder of the project. This formula, as Figure 7-14 demonstrates, is EAC = AC+((BAC-EV)/CPI). Don't you just love nested formulas? Let's try this one out.

Your project has a BAC of $500,000 and your earned value is $150,000. Your actual costs for this project are $162,000. Your CPI is calculated as .93. The EAC would be $162,000+(($500,000-$150,000)/.93), or $538,344. Wasn't that fun?

EXAM TIP There won't be as many questions on these EVM formulas as you'd hope, but knowing these formulas can help you nail down the few questions you'll likely have.

Project Management Made Easy

Project Management Made Easy

What you need to know about… Project Management Made Easy! Project management consists of more than just a large building project and can encompass small projects as well. No matter what the size of your project, you need to have some sort of project management. How you manage your project has everything to do with its outcome.

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