EAC formulas: which estimate at completion should you use?

What estimate at completion means

Every EAC has the same structure: what you have spent so far plus what you expect to spend from now on.

EAC = AC + ETC

• AC (actual cost): money already spent. It is a fact, not a forecast.
• ETC (estimate to complete): the forecast cost of the remaining work. This is where the formulas differ.
• BAC (budget at completion): the total approved cost baseline. EAC is compared with it.
• VAC (variance at completion): VAC = BAC - EAC. Negative means a forecast overrun.

The remaining work, measured at budget rates, is always BAC - EV. The four formulas below are four different assumptions about how efficiently that remaining work will be done. They are not competing answers to the same question; each answers a slightly different question. For the underlying terms, see the earned value management guide.

The four EAC formulas and when to use each

Formula	Assumption	Use it when
EAC = BAC / CPI	Remaining work costs what work has cost so far	The overrun comes from how the work is really going (rates, productivity) and nothing will change that. This is the usual default.
EAC = AC + (BAC - EV)	Remaining work goes exactly to budget	The overrun was a one-off (a single price shock, a fixed event) and you have evidence the rest is on plan.
EAC = AC + (BAC - EV) / (CPI × SPI)	Both cost and schedule performance affect remaining cost	The project is behind and must recover the date, so acceleration, overtime or extra resources will add cost.
EAC = AC + bottom-up ETC	The original estimate is no longer valid	Scope, design or method has changed, or the indices are clearly misleading. You re-estimate the remaining work from scratch.

The first three are mathematical and quick. The fourth takes effort, but it is the only one that uses new information about the remaining work rather than extrapolating the past.

Worked example: all four EAC formulas

A project has a BAC of $500,000. At the status date:

• Planned value PV = $250,000
• Earned value EV = $200,000
• Actual cost AC = $250,000

First the indices. CPI = EV / AC = 200,000 / 250,000 = 0.80. SPI = EV / PV = 200,000 / 250,000 = 0.80. The remaining work at budget rates is BAC - EV = 500,000 - 200,000 = $300,000.

Method	Calculation	ETC	EAC	VAC
BAC / CPI	500,000 / 0.80	375,000	625,000	-125,000
AC + (BAC - EV)	250,000 + 300,000	300,000	550,000	-50,000
AC + (BAC - EV) / (CPI × SPI)	250,000 + 300,000 / 0.64	468,750	718,750	-218,750
AC + bottom-up ETC	250,000 + 340,000	340,000	590,000	-90,000

Check the composite row: CPI × SPI = 0.80 × 0.80 = 0.64, and 300,000 / 0.64 = 468,750. Check the first row another way: ETC = EAC - AC = 625,000 - 250,000 = 375,000, which equals 300,000 / 0.80. The bottom-up figure of $340,000 came from the team re-pricing the remaining work packages with current supplier quotes and crew rates.

The spread is wide: from $550,000 to $718,750. That spread is information. It tells the sponsor that the outcome depends heavily on whether the team can stop the cost drift and whether the end date will be forced.

How to choose and report an EAC

1. Calculate all the index-based EACs every reporting period. They cost nothing and show the range.
2. Ask why CPI is below or above 1.0. A systemic cause (low productivity, wrong rates) points to BAC / CPI. A one-off cause points to AC + (BAC - EV), but only if you can name the event and show it will not recur.
3. Check the schedule. If SPI is low and the end date is fixed by contract or by an event, use the composite as the pessimistic case.
4. Do a bottom-up ETC at major points: after a big scope change, at a phase gate, or when the index-based figures disagree widely.
5. Report one EAC as the forecast and show the others as a range, with one sentence explaining the choice.
6. Test it with TCPI. TCPI to EAC is (BAC - EV) / (EAC - AC). For the bottom-up EAC above, it is 300,000 / (590,000 - 250,000) = 300,000 / 340,000 = 0.88. The team would need to work at 0.88 from now on, a modest improvement on the 0.80 achieved so far, and the re-priced quotes explain why. If the TCPI implied by your chosen EAC is far above the CPI to date, the EAC is optimistic.

Common EAC mistakes

• Picking the formula that gives the nicest number. AC + (BAC - EV) is the most optimistic and the most abused. Use it only with evidence.
• Forecasting too early. In the first weeks, CPI rests on very little data. Index-based EACs swing wildly; lean on the bottom-up estimate until enough work is done.
• Forgetting approved changes. If a change request added scope and budget, update BAC first, or every formula is wrong.
• Treating EAC as a target. EAC is a forecast. If it is unacceptable, the response is a management decision (recovery plan, scope change, more budget), not a different formula.
• Mixing currencies or cut-off dates between AC and EV.

How to do this in Critova

For a quick check, the free earned value calculator returns BAC / CPI, AC + (BAC - EV), ETC, VAC and TCPI from four inputs. On a live project, Critova calculates the EAC family and TCPI from your schedule progress and cost entries, and shows each figure next to its formula, so the person reading the report can see which assumption sits behind each forecast. Approved change requests carry their budget impact, which keeps BAC current.