Lessons · Project management · estimate at completion
EAC: what the whole project will cost, if the pattern holds
The estimate at completion forecasts the final cost: BAC / CPI when the current cost pattern will continue, AC + (BAC − EV) when the overrun was a one-off, and AC + (BAC − EV) / (CPI × SPI) when the schedule slip will cost money too.
Hone is a place to practise a career, one idea a day. This is one of its lessons, written out in full and free to read without an account.
What it is for
The sponsor's real question is never how are we doing; it is what will this cost me in the end. The EAC is that answer, and the form you choose is a statement about why the overrun happened. Choosing the wrong form is a forecast that will be wrong in the same direction every month.
How to think about it
Ask why the CPI is what it is. A rate problem that will continue (wages higher than planned): BAC / CPI. A one-off (a flood, a bad delivery): AC plus the remaining budget at plan rates. Behind schedule and the recovery will cost extra: divide the remaining work by both indexes.
Worked example
BAC = $200,000, EV = $80,000, AC = $100,000, PV = $100,000. CPI = 0.80, SPI = 0.80The status.
Typical: EAC = BAC / CPI = 200,000 / 0.80 = $250,000If every remaining dollar buys 80 cents of work, the project costs $250,000.
Atypical: EAC = AC + (BAC − EV) = 100,000 + 120,000 = $220,000If the overrun was a one-off, the rest of the work is done at plan rates.
Both: EAC = AC + (BAC − EV) / (CPI × SPI) = 100,000 + 120,000 / 0.64 = $287,500If catching up the schedule will also cost money. The most pessimistic of the three.
Your turn
BAC is $500,000 and CPI is 1.25. Write the typical estimate at completion.
EAC = 500,000 / = $400,000
Solve one, graded on the server
The trap
Using BAC / CPI after a one-off hit. A flood in month two does not mean the rates are wrong for months three to twelve; the typical form punishes the forecast for something that will not repeat.