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Calculating Estimate At Completion (EAC) Using 5 Different Formulas

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5 Formulas For EAC

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Calculating Estimate At Completion (EAC) Using 5 Different Formulas

  1. 1. Determining Estimate At Completion 4 Scenarios & 5 Formulas
  2. 2. AGENDA • Definition • Calculating EAC • EAC Scenarios & Formulas Designed and Developed by www.pmbypm.com | Copyright 2018
  3. 3. AGENDA • Definition • Calculating EAC • EAC Scenarios & Formulas Designed and Developed by www.pmbypm.com | Copyright 2018
  4. 4. 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? Designed and Developed by www.pmbypm.com | Copyright 2018
  5. 5. Project Status • On Control Date, some work has been completed while some is remaining. Designed and Developed by www.pmbypm.com | Copyright 2018 COMPLETED REMAINING TOTAL PROJECT SCOPE/WORK
  6. 6. Digramatic Representation of BAC & EAC • Problem Statement - To calculate the expected cost of Total Project Work (EAC) Designed and Developed by www.pmbypm.com | Copyright 2018 EARNED VALUE MONETARY VALUE OF REMAINING WORK ORIGINAL PROJECT BUDGET (BAC) EAC FORECASTED PROJECT BUDGET ETCACTUAL COST/EXPENDITURE
  7. 7. AGENDA • Definition • Calculating EAC • EAC Scenarios & Formulas Designed and Developed by www.pmbypm.com | Copyright 2018
  8. 8. Calculatng EAC • Actual Expenditure Till Date = AC • Estimated Future Expenditure = ETC Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = (Actual Expenditure Till Date) + (Estimated Future Expenditure) EAC = AC + ETC
  9. 9. 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 Designed and Developed by www.pmbypm.com | Copyright 2018 Project Scope Build 80 Tables Project Time Estimate (Duration) 5 Days Cost Estimate Per Table $1000 Project Cost (Budget) $1000*80 = $80000
  10. 10. PROJECT STATUS – EXAMPLE PROJECT Designed and Developed by www.pmbypm.com | Copyright 2018 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 ?
  11. 11. AGENDA • Definition • Calculating EAC • EAC Scenarios & Formulas – ETC Formulas Referenced from Designed and Developed by www.pmbypm.com | Copyright 2018 https://www.slideshare.net/pmalik2/calculating-etc-in-4-different-scenarios
  12. 12. 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. Designed and Developed by www.pmbypm.com | Copyright 2018
  13. 13. SCENARIO I - FORMULA • Generic EAC equation: EAC = AC + ETC Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = AC + (BAC – EV) / CPI ETC = (BAC – EV) / CPI ETC Formula 1 EAC Formula 1
  14. 14. SCENARIO I - FORMULA • Deriving Further from EAC Formula 1 • Replacing CPI with EV/AC Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = AC + (BAC – EV) / CPI ETC = (BAC – EV) / CPI EAC Formula 1 EAC Formula 2
  15. 15. SCENARIO II • The project team believes that the project’s past 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). Designed and Developed by www.pmbypm.com | Copyright 2018
  16. 16. SCENARIO II - FORMULA • Generic EAC equation: EAC = AC + ETC Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = AC + (BAC – EV) ETC = (BAC – EV) ETC Formula 2 EAC Formula 3
  17. 17. SCENARIO III • The project team believes that the project’s past 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. Designed and Developed by www.pmbypm.com | Copyright 2018
  18. 18. SCENARIO III - FORMULA • Generic EAC equation: EAC = AC + ETC Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = AC + (BAC – EV) / CPIp ETC = (BAC – EV) / CPIp ETC Formula 3 EAC Formula 4
  19. 19. 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. Designed and Developed by www.pmbypm.com | Copyright 2018
  20. 20. 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. Designed and Developed by www.pmbypm.com | Copyright 2018 EAC = AC + (BAC – EV) / (CPI * SPI) EAC Formula 5
  21. 21. EAC CALCULATIONS - EXAMPLE PROJECT Designed and Developed by www.pmbypm.com | Copyright 2018 Scenario EAC Formula ETC Value EAC Value I 1 & 2 $46286 $82286 II 3 $45000 $81000 III 4 $37500 $73500 V 5 $53019 $89019
  22. 22. YOUR OPINION IS IMPORTANT TO US For Any Questions Or Suggestions Contact Us @ https://www.pmbypm.com/contact-praveen-malik/ Designed and Developed by www.pmbypm.com | Copyright 2018

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