The estimate at completion is the estimated total cost of the project. It is the sum of all direct and indirect costs to date plus authorised work remaining. Different textbooks give different methods of evaluating EAC, but generally:

EAC = ACWP + Estimate to complete (ETC)

and this is the updated estimate of the total project cost.

This approach is sometimes known as the planned estimate approach because it relates the original planned estimate to complete (EAC) for the project to the amount of money that has been spent to date. The planned estimate approach effectively adjusts the planned estimate by the extent to which the project is currently under cost or over cost.

The planned estimate approach is simplistic in that it assumes that the current underspend or overspend will continue for the remainder of the project. The current cost variance is revised at each reporting stage but the approach really only provides a ‘moving target’ revision of EAC which gradually becomes more accurate as the project approaches completion. The approach is sometimes referred to as the ‘moving gun sight’ approach.

The EAC can also be expressed in terms of the budget at completion BAC as follows:

EAC = BAC−CV

In this format the EAC is equivalent to the BAC minus any cost variance. A negative cost variance indicates a cost over run (BCWP < ACWP) and therefore has the effect of increasing BAC and therefore increasing EAC.

EAC can also be expressed in terms of the cost variance index (CVI) as follows: BAC x (ACWP/BCWP)

Project Management