What is EAC?
Estimate at Completion (EAC) is a project management tool that forecasts the total cost of a project based on current performance and future work. It helps project managers and stakeholders understand how much the project is expected to cost by the time it is completed. EAC is calculated by analyzing the project's actual costs to date and projecting the remaining uncommitted costs needed to finish the project.
About EAC
EAC is an essential component of cost management in construction and capital projects. It allows project managers to adjust their financial planning and resource allocation based on real-time data and current project performance. By providing a forward-looking estimate, EAC helps identify potential budget overruns and supports proactive decision-making to keep the project on track.
EAC Formula
Calculating an accurate EAC with the correct EAC Formula will ensure you have all project cost data accurate and up-to-date. This includes tracking actual costs and work performed.
- Use Multiple Methods: Consider using different methods for calculating EAC to gain a comprehensive view. Common methods include:
- EAC = AC + (BAC - EV): Assumes future work will be completed at the planned budget rate.
- EAC = BAC / CPI: Assumes future work will be completed at the current cost performance rate.
- EAC = AC + [(BAC - EV) / (CPI * SPI)]: Adjusts for both cost and schedule performance.
- Analyze Variances: Compare EAC with the original Budget at Completion (BAC) to identify and analyze variances. This helps in understanding the reasons behind cost overruns or savings.
EAC vs. BAC
- Estimate at Completion (EAC): Provides a forecast of the total project cost at completion based on current performance data.
- Budget at Completion (BAC): Represents the original total budget allocated for the project at the outset, based on initial estimates.
EAC vs. ETC
- Estimate at Completion (EAC): Predicts the total cost of the project at completion, combining actual costs to date (AC) with the estimated costs for the remaining work.
- Estimate to Complete (ETC): Represents the estimated cost required to complete the remaining work of the project. It focuses solely on the future work needed to finish the project.
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.
By using EAC, project managers can maintain better control over project finances, anticipate potential budget issues, and make proactive adjustments to ensure successful project completion.
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.
EAC Example
By leveraging Mastt, Project Owners and Project Managers can enhance decision making, leading to more efficient project execution, increased quality and more successful outcomes.
