Calculating Estimate At Completion (EAC) Using 5 Different Formulas

Determining Estimate At
Completion
4 Scenarios & 5 Formulas

AGENDA
• Definition
• Calculating EAC
• EAC Scenarios & Formulas
Designed and Developed by www.pmbypm.com | Copyright 2018

ESTIMATE AT COMPLETION
The expected total cost of completing all work expressed as
the sum of the actual cost to date and the estimate to
complete.
How much money is needed to complete the total project
work?

Project Status
• On Control Date, some work has been completed while
some is remaining.
COMPLETED REMAINING
TOTAL PROJECT SCOPE/WORK

Digramatic Representation of BAC & EAC
• Problem Statement - To calculate the expected cost of Total Project Work (EAC)
EARNED VALUE
MONETARY VALUE OF
REMAINING WORK
ORIGINAL PROJECT BUDGET (BAC)
EAC
FORECASTED PROJECT BUDGET
ETCACTUAL COST/EXPENDITURE

Calculatng EAC
• Actual Expenditure Till Date = AC
• Estimated Future Expenditure = ETC
EAC = (Actual Expenditure Till Date) + (Estimated Future Expenditure)
EAC = AC + ETC

PROJECT PLAN
• Reference
– https://www.slideshare.net/pmalik2/101-a-beginners-guide-to-earned-value-management
– https://www.slideshare.net/pmalik2/calculating-etc-in-4-different-scenarios
Project Scope Build 80 Tables
Project Time Estimate (Duration) 5 Days
Cost Estimate Per Table $1000
Project Cost (Budget) $1000*80 = $80000

PROJECT STATUS – EXAMPLE PROJECT
Work Completed 35 out of 80 tables
Actual Expenditure $36000 for building 35 tables
Remaining Project Work 45 tables
ETC Different in different scenarios
EAC ?

AGENDA
• Definition
• Calculating EAC
• EAC Scenarios & Formulas
– ETC Formulas Referenced from
https://www.slideshare.net/pmalik2/calculating-etc-in-4-different-scenarios

SCENARIO I
• The project team believes that the project’s past
performance will continue to effect the future performance.
• The project would continue to expend money at the current
rate.
• The remaining work would be completed at
project’s current cost efficiency.

SCENARIO I - FORMULA
• Generic EAC equation: EAC = AC + ETC
EAC = AC + (BAC – EV) / CPI
ETC = (BAC – EV) / CPI
ETC Formula 1
EAC Formula 1

SCENARIO I - FORMULA
• Deriving Further from EAC Formula 1
• Replacing CPI with EV/AC
EAC = AC + (BAC – EV) / CPI
ETC = (BAC – EV) / CPI
EAC Formula 1
EAC Formula 2

SCENARIO II
performance will not effect the future performance.
• The irregularities of the past would not be repeated in
future.
• The remaining work would be completed at project’s 100%
cost efficiency (as per the original estimates).

SCENARIO II - FORMULA
EAC = AC + (BAC – EV)
ETC = (BAC – EV)
ETC Formula 2
EAC Formula 3

SCENARIO III
performance will not effect the future performance.
• The team also believes that project would expend money
neither at current rate nor at 100%.
• The remaining work would be completed at new cost
efficiency - CPIp.

SCENARIO III - FORMULA
EAC = AC + (BAC – EV) / CPIp
ETC = (BAC – EV) / CPIp
ETC Formula 3
EAC Formula 4

SCENARIO IV
• After analysing the project’s past performance, The project team
believes that the original estimates were not good.
• The cost of remaining work should be re-estimated i.e. ETC
should be determined afresh.
• A fresh ETC can by found by estimating the cost of remaining
(unfinished) work from the Work Breakdown Structure (WBS).
• The project team can re-estimate the cost of remaining work
components (work packages and activities) and then total then
total them Upwards in the WBS to determine a fresh ETC.
• There is no ETC formula for this scenario.

SCENARIO V
• To find revised project budget for completing the project work within
the Original Schedule and at the current CPI.
• Current Project Performance Efficiencies
– Schedule Efficiency - Schedule Performance Index (SPI).
– Cost Efficiency - Cost Performance Index (CPI).
• To determine the budgetary cost to complete the project work within
original schedule, we have to consider both CPI and SPI.
EAC = AC + (BAC – EV) / (CPI * SPI)
EAC Formula 5

EAC CALCULATIONS - EXAMPLE PROJECT
Scenario EAC Formula ETC Value EAC Value
I 1 & 2 $46286 $82286
II 3 $45000 $81000
III 4 $37500 $73500
V 5 $53019 $89019

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