Estimate at Completion (EAC), and Estimate to Complete (ETC)

Estimate at Completion (EAC) and Estimate to Complete (ETC)

Introduction: Why This Matters

While CV, SV, CPI, and SPI show how a project is performing today, forecasting formulas like Estimate at Completion (EAC) and Estimate to Complete (ETC) look forward. They allow project managers to answer two critical stakeholder questions:

  1. “How much will this project cost when it is finished?”
  2. “How much more money do we need to complete the work?”

These forward-looking metrics turn past performance into actionable forecasts. On the PMP exam, EAC and ETC questions often test whether you can select the right forecasting approach for the given scenario. In practice, they support transparent reporting, funding requests, and decisions about corrective action.

Purpose and Objectives

Primary Purpose: To provide realistic cost projections based on performance trends.

Key Objectives:

  • Define and calculate Estimate at Completion (EAC) using multiple formulas.
  • Define and calculate Estimate to Complete (ETC).
  • Select the correct EAC formula based on project context.
  • Interpret results to explain project financial health to stakeholders.
  • Apply forecasting methods on the PMP exam with confidence.

Overview

EAC and ETC forecasting relies on core Earned Value Management inputs, applied through trend-based formulas and analysis, to produce forward-looking projections and recommendations.

  • Inputs: Budget at Completion (BAC), Earned Value (EV), Actual Cost (AC), CPI, and sometimes SPI.
  • Tools & Techniques: EVM forecasting formulas, trend analysis, and project reporting systems.
  • Outputs: Forecasted total cost (EAC), remaining cost projection (ETC), and corrective action recommendations.

Characteristics

  • Forward-looking: Converts current performance into a forecast of final cost and remaining spend.
  • Scenario-driven: The “right” EAC formula depends on whether trends will continue, anomalies occurred, or schedule affects cost.
  • Decision-enabling: Supports transparent reporting, funding requests, and corrective actions.
  • Update-friendly: Forecasts should be recalculated regularly as new performance data comes in.

Practical Example

Context: A city infrastructure project has BAC = $10,000,000, EV = $4,000,000, AC = $5,500,000, and CPI = EV ÷ AC = 0.73.

Activities:

  • Case 1 (trend expected to continue): EAC = BAC ÷ CPI = 10,000,000 ÷ 0.73 = $13,698,630. ETC = EAC – AC = 13,698,630 – 5,500,000 = $8,198,630.
  • Case 2 (original plan still valid): EAC = AC + (BAC – EV) = 5,500,000 + (10,000,000 – 4,000,000) = $11,500,000.

Outcome: If cost inefficiency continues, the project may exceed budget by nearly $3.7M, but if inefficiencies were temporary, the project may finish closer to $1.5M over budget. The forecast (and your message to stakeholders) changes based on the scenario.

Common Pitfalls

Formula Selection and Interpretation

  • Pitfall: Using the wrong EAC formula for the scenario.
  • Prevention: Match the formula to the wording, such as “trends continue” vs “original plan still valid.”

ETC Assumptions

  • Pitfall: Assuming ETC is always EAC – AC.
  • Prevention: Recalculate bottom-up ETC when conditions are atypical or remaining work must be re-estimated.

Schedule Impact Blind Spots

  • Pitfall: Ignoring SPI when schedule delays are driving cost impacts.
  • Prevention: Use the CPI × SPI version when the scenario indicates schedule performance will affect cost.

One-and-Done Forecasting

  • Pitfall: Treating EAC as static.
  • Prevention: Update forecasts regularly as performance data changes.

Sensei Tip : If the question says performance will continue, default to EAC = BAC ÷ CPI. If it says the original plan is still valid, use EAC = AC + (BAC – EV).

Exam Alert : The PMP exam often gives enough numbers for multiple EAC formulas. Your job is to pick the formula that matches the scenario wording, not just the one you can calculate.

Exam Lens

Patterns on the PMP Exam:

  • Expect situational prompts that hint which EAC formula to use.
  • Watch for phrases like “past performance expected to continue” (use BAC ÷ CPI) or “original plan still valid” (use AC + (BAC – EV)).
  • Some questions are “multi-formula solvable.” Select based on context, not math convenience.

Sample Question

Question: A project has BAC = $800,000, EV = $300,000, and AC = $400,000. Performance trends are expected to continue. What is the EAC?

  1. $800,000 ÷ (300,000 ÷ 400,000) = $1,066,667
  2. $400,000 + (800,000 – 300,000) = $900,000
  3. $400,000 + [(800,000 – 300,000) ÷ (0.75 × 0.85)] = $1,188,235
  4. $400,000 + bottom-up estimate of remaining work

Correct Answer: A. CPI = EV ÷ AC = 0.75. EAC = BAC ÷ CPI = 800,000 ÷ 0.75 = 1,066,667.

Quick Recap Table

Metric Formula Purpose Exam Watch Point
EAC Several (BAC ÷ CPI, AC + (BAC – EV), etc.) Forecast total cost Match formula to scenario
ETC EAC – AC (or bottom-up estimate) Remaining cost Sometimes requires bottom-up recalculation

Key Takeaways

  • EAC forecasts the total cost of the project, while ETC forecasts the remaining cost.
  • Different EAC formulas apply depending on whether past performance is expected to continue, the original plan is still valid, or conditions are atypical.
  • CPI and SPI are essential in determining the right EAC approach when schedule affects cost.
  • On the exam, pay close attention to wording to identify the correct formula.
  • In practice, forecasts should be updated regularly for accuracy.

Next Step

With EAC and ETC established, we move forward to To-Complete Performance Index (TCPI), which measures the efficiency required in future work to meet either the original budget or the revised forecast.

Bibliography

Project Management Institute. (2021). A Guide to the Project Management Body of Knowledge (Project Management Body of Knowledge) (7th ed.). Project Management Institute.

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