The Estimate at Completion (EAC) is an independent forecast for what it will cost to complete any given level of effort in the Work Breakdown Structure (WBS). EAC is a tool used in Earned Value Management (EVM) and cost estimation and is equal to the Actual Cost of Work Performed (ACWP) plus the ETC for all of the remaining work.
Definition: Estimate at Completion (EAC) is the forecasted budget that it will take to finish a project or program at a given time during a project or program.
There are tools available that can be used to predict the EAC based upon the past history of contractor performance on the contract (e.g., cost and schedule efficiencies). These EAC predictions are very useful to a program manager assessing whether sufficient funds are available to cover the cost of the contract at completion.
Estimate at Completion (EAC) Formulas
The earned value EAC formula is based on the simple concept that the estimate at completion is equal to the amount of money already spent on the contract plus the amount of money it will take to complete the contract. Translating this into the language of earned value; money already spent is ACWP, and money need to complete the contract is based on budget cost of work remaining, or BCWR, divided by a performance factor.
The standard EVM EAC equations are:
- EAC = ACWP + ETC
- EAC = BAC / CPI
- EAC = AC + (BAC – EV)
- EAC = ACWP + (BAC – BCWP) / CPI + SPI)
Earned Value Management (EVM) Glossary
- ETC: Estimate at Completion
- BAC: Budget at Completion
- CPI: Cost Performance Index = BCWP / ACWP Favorable is > 1.0, Unfavorable is < 1.0
- SPI: Schedule Performance Index = = BCWP / BCWS Favorable is > 1.0, Unfavorable is < 1.0
- EV: Earned Value
The five (5) main Earned Value Management (EVM) variables:
- BCWS = Budgeted Cost of Work Scheduled
- BCWP = Budgeted Cost of Work Performed
- ACWP = Actual Cost of Work Performed
- BAC = Budget at Completion
- EAC = Estimate at Completion
AcqLinks and References:
- Defense Acquisition Guidebook (DAG)
- DoD Earned Value Management Interpretation Guide – Jan 2018
- DOE EVMS Gold Card – Feb 2019
- DAU EVM Gold Card 2020