Managing the Estimate At Completion Value
Estimate At Completion is usually forecaster by the project team to estimate the cost at completion. This will likely differ from the Budget At Completion.
The Estimate At Completion is usually based on the actual project costs incurred for work completed plus an estimate to complete (ETC) the remaining project work. Commonly the ETC is calculated using the bottom-up method to get the most accurate estimate.
1. Estimate New Remaining Project Work
EAC = AC + Bottom-up ETC
What this means: our original cost estimates to complete the work was not accurate, or something changed.
When to use: new estimate required to complete the remaining work.
2. The Remaining Work Will Be Performed at the Original Planned Rate
EAC = AC + (BAC – EV)
What this means: We accept past performance but expect to perform future work at the budgeted rate.
When to use: when variances are atypical or one time and will not continue into the future.
3. We Will Continue to Spend at the Same Rate
EAC = BAC / CPI
What this means: We continue as planned and we can expect the same performance in the future.
When to use: No variance exists and we expect to continue at the same cost performance index.
4. Both SPI and CPI factors Will Influence Remaining Work
EAC = AC + [(BAC – EV) / (CPI × SPI)]
What this means: We need to consider both the cost performance and schedule performance.
When to use: When both schedule and cost are impacting ETC.