Unlike many of the other project management formulas which are quite rigid and simple, there are a number of different ways in addition to the above EAC formula which companies and project managers can employ. In the above formula, actual costs refers to the costs incurred on the project so far, while the estimate to complete (ETC) is the forecast for how much more money will need to be spent to finish the project - or the amount of money needed to complete the work.
The combination of these two numbers gives us our EAC. The most common approach and most common EAC formula stems from a bottoms up approach, where the actual costs (AC) are added to the forecasted remaining spend. The EAC formula can differ from company to company and project to project, depending on the level of information available, as well as what is deemed most appropriate and accurate. Management and other stakeholders are constantly looking for new and improved updates, and these asks fall at the feet of project managers and other personnel who are charged with using EAC and other project management tools to verify that the project is on time and on budget.Įstimate at completion is used across many industries, but is particularly useful in industries like construction, oil and gas and mining, where projects run for many years and include many interdependent parties and external forces.ĮAC in project management has some of the most flexibility and customisation around formulas of any of the project management measures. Once a number or single significant change in the forecast takes place, the EAC replaces the BAC as the new budgetary forecast. In some cases, the original budget for the project may be completely invalid due to some external force. EAC may be calculated and used during any stage of the project as a sanity check and measure against the original forecast ( budget at completion or BAC) as well as the project schedule.ĮAC in project management is part of the earned value management method, which seeks to give project managers and companies a more objective measure and more visibility into progress against the two main dimensions of performance: cost and schedule.Īlthough all companies set a plan and BAC at the outset of a project, as a project progresses, there is very often some variation and deviation from this original plan - which makes it important to provide better estimates throughout a project which stem from new and improved information.ĭifferences between the BAC and EAC in project management can stem from many different factors including unforeseen cost variances, risks, safety issues, incorrect assumptions and more. EAC or the 'estimate at completion' is the forecasted cost of a project, after the project has begun.