EAC

[mad...@gmail.com]

We have 4 types of EAC formulas available, but am confused about when to use them

EAC =  BAC / CPI

EAC = ETC + AC

EAC = (BAC-EV) + AC

EAC = [BAC-EV / spi * cpi] + AC

I am having problem to decide how to calculate EAC? see this question:

As a project manager you realize that the initial budget cost, Budget at Completion (BAC) for your project is no longer viable. You need to develop a new Estimate At Completion (EAC) forecast assuming current variances would continue in the future. Which of the following formula should you use for calculating EAC? Here AC is the Actual Cost , EV is the Earned Value, PV is the Planned Value .

EAC = AC + ETC

EAC= AC+ (BAC - EV)

EAC = EV/PV

EAC = BAC/ cumulative CPI

[Ramesh K R]

You should check Rita's book or Harwinder's excellent explanation at his site as below:

http://www.deepfriedbrainproject.com/2009/09/estimate-at-completion-eac-earned-value.html#more

http://www.deepfriedbrainproject.com/2010/01/solving-estimate-at-completion-puzzle.html

It is given in the question that current variance would continue in to future, so the correct formula would be BAC/CPI

Initially PV - 1000$ but now there is variance of 500 which resulted in spending 1500$. Also you expect this 1500 to be true value now on for spending.

So, thats what means - that variance continue in to future. In case you had the variance but you dont expect it to continue, i.e original estimate holds good now on, then the formula would be AC+(BAC-EV).

Regards
Ramesh PMP®

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[Gurumoorthy Paulraj]

my answer is EAC = BAC/ cumulative CPI

[Jawed Khan]

Hi

 

This is Jawed from Qaizen and below are the explanations to remove your confusion about calculating EAC

 

when the scenario is of calculating EAC at original budgeted rate you must use formula EAC= AC+ (BAC - EV)

and when the scenario says about calculating EAC at present or current rate than the formula will be  BAC / cumulative CPI 

 

Regards,

 

Jawed, PMP, ITIL, C2F

+91 99874 83440

Skype:  jawed.khan87

Thanks and regards,

 

Jawed Khan, ITIL®,PMP® & C2F®

Vice President Certification Training

Qaizen Management & Consulting Services

TEAM:Together Everyone Achieves More..

Mob:+91-99874 83440 / 93242 06752

Skype: jawed.khan87/ Gtalk: jawed....@gmail.com

Web Profile: http://in.linkedin.com/in/jawedkhan

 

 

On Sun, Apr 7, 2013 at 2:07 PM, mad...@gmail.com <mad...@gmail.com> wrote:

[Kanthan P]

Jawed, That's correct. If the project to continues at current variances EAC = BAC/CPI.