Estimate at Completion (EAC)

Estimate at Completion (EAC) is the current best forecast of what a project will cost in total once it is finished, blending the money already spent (Actual Cost) with a forecast of the cost of the work that remains. Earned Value Management defines four standard ways to make that forecast, each suited to a different assumption about the future.

First, EAC = AC + (BAC - EV) assumes the remaining work will be done at the originally budgeted rate, treating past variances as one-offs. Second, EAC = BAC / CPI assumes current cost efficiency continues to the end - the most widely used formula. Third, EAC = AC + (BAC - EV) / (CPI x SPI) assumes both cost and schedule pressure persist, giving the most conservative number. Fourth, EAC = AC + a fresh bottom-up Estimate to Complete (ETC) is used when past performance no longer predicts the future.

Here BAC is the Budget at Completion, EV the Earned Value, AC the Actual Cost, CPI the Cost Performance Index and SPI the Schedule Performance Index. For example, with BAC = 1,000,000 and a CPI of 0.90, EAC = BAC / CPI = 1,111,111 - an 11% overrun forecast from cost efficiency alone. Choosing the right formula is mostly about how much you trust performance to date to repeat.