What is EAC in Project Management?
Estimate at Completion (EAC) is a project management metric that forecasts the total expected cost of a project upon completion. It helps project managers and stakeholders assess whether the project will stay within budget or exceed planned costs. EAC is calculated by summing the actual costs incurred to date (Actual Cost - AC) and the estimated remaining costs required to complete the project (Estimate to Complete - ETC), using the formula EAC = AC + ETC.
Why EAC Matters in Cost Management?
EAC plays a crucial role in cost management plan for construction and capital projects, enabling project managers to refine financial planning and resource allocation using real-time data. By continuously updating cost forecasts based on actual performance, EAC helps identify potential budget overruns early. This forward-looking estimate supports proactive decision-making, allowing teams to implement corrective actions and keep the project financially on track.
A good EAC example is when a construction project has a Budget at Completion (BAC) of $1,000,000 but has already spent $600,000 (AC). After evaluating the remaining work, the project team estimates an additional $450,000 (ETC) is needed to finish the project. Using the formula EAC = AC + ETC, the new EAC is $1,050,000, meaning the project is now $50,000 over budget.
If the team doesn’t take corrective action, this cost overrun could increase, impacting profitability and resource allocation.
How to Calculate EAC in Project Management
To calculate Estimate at Completion (EAC) in project management, add the actual costs incurred (AC) to the estimated costs required to complete the remaining work (ETC). The appropriate EAC formula depends on project conditions, including cost performance, schedule efficiency, and historical trends.
EAC Formulas in Project Management
1. When cost performance remains stable: EAC = BAC / CPI
- Use this when the project’s current cost performance index (CPI) is expected to remain unchanged.
- Example: If the CPI is 0.9 and the Budget at Completion (BAC) is $500,000, then: EAC = 500,000 / 0.9 = $555,556
2. When past cost variances are one-time issues: EAC = AC + (BAC – EV)
- Assumes future costs will follow the original budget estimates.
- Example: If Actual Cost (AC) = $300,000, BAC = $500,000, and Earned Value (EV) = $250,000, then: EAC = 300,000 + (500,000 - 250,000) = $550,000
3. When both cost and schedule performance affect completion: EAC = AC + [(BAC – EV) / (CPI × SPI)]
- Use this if cost and schedule performance indices (CPI & SPI) influence the final estimate.
- Example: If CPI = 0.9, SPI = 0.8, BAC = $500,000, EV = $250,000, and AC = $300,000, then: EAC = 300,000 + [(500,000 - 250,000) / (0.9 × 0.8)] = $647,222
4. When the remaining work is re-estimated separately: EAC = AC + ETC
- Used when the project team re-evaluates remaining costs independently.
- Example: If AC = $300,000 and the revised Estimate to Complete (ETC) = $220,000, then: EAC = 300,000 + 220,000 = $520,000
Using the correct EAC formula in project management ensures accurate cost forecasting, helping project managers anticipate budget overruns, refine financial planning, and keep the project on track.
EAC Project Cost Calculator
Use this Estimate at Completion (EAC) calculator to forecast your project's total cost. Simply input your known values below and click Calculate to see EAC estimates using different calculation methods.
EAC vs. BAC
The main difference between EAC (Estimate at Completion) and BAC (Budget at Completion) is that BAC is the total planned budget, while EAC is the updated cost estimate based on actual project performance. BAC (the original approved budget) is fixed at the start, whereas EAC (the revised forecast) changes as costs fluctuate.
- BAC (original budget) remains constant, but EAC (updated estimate) adjusts based on real-time cost performance.
- BAC helps set financial expectations, while EAC tracks whether the project will stay within budget.
- If EAC is greater than BAC, the project is exceeding the budget and may need corrective action.
For example, if a project has a BAC of $750,000, but due to unexpected delays, the EAC rises to $900,000, the project is now $150,000 over budget, signaling financial risks that need immediate attention.
EAC vs. ETC
The key difference between EAC (Estimate at Completion) and ETC (Estimate to Complete) is that EAC represents the total projected cost of the project, while ETC represents the cost required to complete the remaining work.
- EAC (total expected cost) includes both actual costs incurred and future costs, while ETC only considers what’s left to be spent.
- EAC helps project managers forecast the final project cost, while ETC focuses on estimating the remaining budget needed.
- EAC is calculated as
EAC = AC + ETC, meaning ETC is a component of EAC and helps adjust financial projections. - EAC assesses overall budget health, whereas ETC helps teams plan resource allocation for the remaining work.
For instance, a project originally had a Budget at Completion (BAC) of $800,000. So far, the team has spent $500,000 (AC). After reviewing the remaining tasks, they estimate they need $250,000 (ETC) to finish.
- The EAC is $750,000 (EAC = AC + ETC → 500,000 + 250,000), meaning the project is expected to be $50,000 under budget.
- The ETC of $250,000 represents the amount still needed to complete the project.
By comparing EAC vs. ETC, project managers can adjust forecasts, control costs, and ensure resources are allocated efficiently.
When to Use Estimate at Completion
- Ongoing Monitoring: Use EAC throughout the project lifecycle to continuously monitor and update cost forecasts based on actual performance.
- Identifying Trends: Analyze EAC regularly to identify trends and potential issues that could impact the project budget.
- Making Informed Decisions: Utilize EAC data to make informed decisions about resource allocation, cost control, and project planning.
- Stakeholder Reporting: Provide updated EAC figures in regular reports to stakeholders, ensuring transparency and informed decision-making.
EAC in Project Management Software
Mastt provides a comprehensive platform designed to enhance Construction Project Management for capital projects. Here’s how Mastt can assist:
- Centralized Dashboard: Mastt's dashboard offers a centralized view of all project activities, helping project managers track progress and manage tasks effectively.
- Documentation and Tracking: The platform provides tools for documenting and tracking all project-related information, ensuring that everything is recorded and managed systematically.
- Budget and Schedule Management: Mastt helps project managers stay on top of budgets and schedules by providing real-time insights and analytics.
- Risk Management: By offering robust risk management tools, Mastt enables construction managers to identify and mitigate risks early, ensuring projects stay on track.
- Stakeholder Collaboration: Mastt enhances communication and collaboration between the project owner, contractors, and other stakeholders, ensuring that everyone is aligned and informed.
By leveraging Mastt, project managers can improve their management of construction projects, leading to more successful outcomes and greater control over project variables.
Tracking Estimate at Completion (EAC) is easier with real-time budget and cost insights in Mastt.
