EAC (Estimate at Completion)

How it is computed

The base form is EAC = BAC ÷ CPI: a $100k budget at CPI 0.83 projects to roughly $120k. Variants encode different assumptions. If the inefficiency so far was one-off and the rest goes to plan, EAC = AC + (BAC − EV). If schedule pressure will push costs further, the remaining work is divided by CPI and SPI together. Two derivatives follow: ETC = EAC − AC (cost remaining) and VAC = BAC − EAC (variance against budget).

Why it matters

It turns "will we finish within budget?" from a feeling into arithmetic. And the choice of formula is itself a declaration of assumptions: choosing BAC ÷ CPI says the efficiency so far will repeat to the end; choosing AC + (BAC − EV) says the trouble is already behind you. When an EAC goes into a report, writing the assumption next to the number is the honest form. And the moment the projection crosses the budget is the moment to act: decisions to cut scope or adjust budget arrive in time only when they start at the EAC's warning.

Common misconceptions

Reading EAC as a settled future is the misconception — it is an extrapolation of current performance, not a commitment. Trusting a single formula is another: computing two or three with different assumptions, showing the optimistic-to-pessimistic spread, serves judgment better. And early-project EACs swing hard on small samples: one or two events that move CPI early on move EAC by multiples. Set a refresh cadence as well — a projection stays a projection only if it is recomputed at every report.