EAC = AC + ETC
Explanation: Estimate at Completion = Actual Cost + Estimate to Complete
Rationale: The project has flawed estimates and there are significant variances. This formula assumes that the project team creates a new ETC forecast from detailed replanning meeting and adds this new estimate of what it will take to finish the project to what the project has already spent. Don’t use this formula if variances are typical as this EAC calculation takes the most project time.

EAC = AC + BAC – EV
Explanation: Estimate at Completion = Actual Cost + Budget at Completion – Earned Value ( e.g., Work actually accomplished)
Rationale: The project variances early in the project are assumed to be atypical variances and will not continue in future periods. This formula only accounts for the over or under spending in the early part of the project and assumes that the spending for the rest of the project will be on-target with the original assumptions.

EAC = (AC + (BAC-EV)/CPI)
Explanation: (Actual Cost + (Budget at Completion – Earned Value)/Cost Performance Index.
Rationale: The project variances early in the project are assumed to be typical variances that will continue in future periods. So the balance of the project spending is adjusted up or down based upon the CPI for the project variances to date. The project manager needs to justify why or why not they believe the original assumptions just need to be adjusted vs. a significant replanning effort begun. The control limits for project spending provides guidance here on what is an acceptable variance vs. what is acceptable. If it is an unacceptable variance, the project needs to use EAC = AC + ETC instead.

EAC = BAC / CPI
Explanation: Budget at Completion/Cost Performance Index.
Rationale: This is a quick and easy formula but it isn’t in the PMBOK. Why? Well, since you are already doing Earned Value Management in a tool or a spreadsheet, some of the other formula’s are more accurate and as easy to calculate. In addition, this formula makes a lot of simplifying assumptions. But it has its’ use as a quick and dirty look that is easily explainable to others. The key question is whether it actually reflects what the future may be.

Enjoy studying for the PMP or your project adventures!

Rosemary Hossenlopp, PMP