EAC: What is Estimate at Completion?

TL;DR

Estimate at Completion (EAC) is the expected total cost of a project when all work is complete and can be calculated using various approaches.

Transcript

i've already done a video answering the question what is earned value management but often the most important measure in earned value management is eac estimate at completion so in this video i'm going to answer the question what is estimate at completion the estimate at completion is the expected total cost of your project when all of the work is ... Read More

Key Insights

• 📽️ The estimate at completion (EAC) is a crucial measure in earned value management for determining the projected total cost of a project.
• 🎚️ Different assumptions and calculation methods can be used to estimate the remaining cost, depending on the level of performance and expected changes.
• 🫰 The cost performance index (CPI) and schedule performance index (SPI) can be utilized to adjust the estimate based on past performance.
• ❓ Precision in calculating the estimate to complete does not guarantee accuracy, as it relies on assumptions and forecasts.

Questions & Answers

Q: What is the estimate at completion (EAC) in earned value management?

The EAC is the projected total cost of a project when all work is complete. It takes into account the actual cost of work performed and the estimate to complete the remaining work.

Q: How can you calculate the estimate to complete for a project?

There are different approaches to calculate the estimate to complete. One method is assuming that all problems causing budget overruns have been resolved, and the remaining work will follow the original plan. Another method is using the cost performance index (CPI) to modify the previous estimate based on past cost performance.

Q: How does the cost performance index (CPI) affect the estimate to complete?

The CPI, which is the ratio of earned value to actual cost, can be used to adjust the estimate to complete. By dividing the budget at completion by the CPI, you can estimate how much the cost will increase based on past performance.

Q: Is there a more pessimistic approach to calculating the estimate to complete?

Yes, the most pessimistic approach considers both the CPI and the schedule performance index (SPI). By dividing the budget at completion minus the earned value by the CPI multiplied by the SPI, you can estimate a higher cost increase and potential schedule slippage.

Summary & Key Takeaways

• The estimate at completion (EAC) is the projected total cost of a project when all work is done.

• EAC can be calculated during the project based on the actual cost of work performed and the estimate to complete the outstanding work.

• There are multiple ways to calculate the estimate to complete, ranging from assuming everything will go according to plan to considering ongoing problems and performance levels.