Estimate at Completion (EAC)
A forward-looking forecast of the total cost (or duration) of a project at completion, derived from current performance data and assumptions about future performance.
Definition
Estimate at Completion (EAC) is the project's best current forecast of total cost when the work is finished. Unlike the original Budget at Completion (BAC), which is fixed at baseline, EAC moves with reality. It combines what has been spent so far (Actual Cost) with what is forecast to be spent for the remaining work (Estimate to Complete, ETC). The discipline behind a credible EAC is the difference between a forecast that drives decisions and one that gets quietly revised every month.
History
EAC entered formal practice through the U.S. defence cost-management standards of the 1960s and the ANSI/EIA-748 EVM standard. AACE Recommended Practice 86R-14 covers EAC methods for capital projects. The discipline crossed into IT delivery in the 1990s and into agile programme management through frameworks like SAFe in the 2010s.
Five EAC Formulas
- EAC = AC + Bottom-up ETC: rebuild the estimate from the remaining scope. Most accurate, most expensive.
- EAC = BAC / CPI: assumes future cost performance matches the past. Reliable for stable projects.
- EAC = AC + (BAC − EV): assumes future work performs at plan. Optimistic; used early.
- EAC = AC + (BAC − EV) / (CPI × SPI): assumes future work suffers both cost and schedule pressure. Most pessimistic.
- EAC = AC + (BAC − EV) / (w1·CPI + w2·SPI): weighted blend, used on programmes with explicit recovery assumptions.
Real-World Construction Example
A water-treatment plant project with BAC of $186M and CPI of 0.91 at 35% complete produced three EACs: CPI-only at $204M, CPI×SPI at $213M, and bottom-up at $208M. The team reported all three and the sponsor's risk committee chose $213M as the contracted forecast. By project close, actual cost was $211M — well inside the chosen range. The discipline of triangulating EACs avoided the typical late-project budget shock.
Real-World IT / Agile Example
On a multi-year transformation programme, the team computed quarterly EACs using the budgeted cost of features delivered and team capacity costs. The CPI-based EAC trended from £14.2M to £16.9M over a year; meanwhile the burn-up chart showed 11% scope growth. The combination of the two — cost efficiency × scope growth — gave the steering committee a clear picture of why money was running out, separating productivity issues from scope issues.
Project Controls Perspective
Controls leads report at least two EAC variants — CPI-only and CPI×SPI — and a bottom-up reconciliation at major stage gates. The variance between methods is itself a diagnostic: wide gaps signal volatility, narrow gaps signal stable performance. The forecast should always be paired with a Variance at Completion (VAC = BAC − EAC) and a To-Complete Performance Index (TCPI).
Common Mistakes
- Reporting EAC equal to BAC — a "no change" forecast that nobody believes.
- Picking the most optimistic formula and ignoring the others.
- Excluding committed costs (signed POs not yet invoiced) from AC, producing a flattering EAC.
- Not updating EAC monthly; the forecast drifts behind reality.
- Failing to communicate the assumptions inside the EAC method.
- Bottom-up estimates done as box-checking, not real re-estimation.
Expert Tips
- Report a range, not a number. EACmin/EACmax force the conversation about uncertainty.
- Triangulate. CPI-only, CPI×SPI, and bottom-up should agree within reason; if not, investigate.
- Include committed costs in AC. Otherwise EAC understates reality.
- Compute VAC and TCPI alongside. They turn EAC into a decision tool.
- Re-estimate bottom-up at stage gates. Formulas drift; reality doesn't.
Key Takeaways
- EAC = AC + ETC; always changing, never fixed.
- Different formulas embed different assumptions about future performance.
- Triangulating methods exposes hidden volatility.
- Include committed costs; exclude them at your peril.
- Pair EAC with VAC and TCPI for decisions, not just reports.
Related Concepts
EAC sits inside EVM, alongside CPI, Budget Control, Cost Control, and Contingency. Worked examples at PMMilestone.org.
Frequently Asked Questions
What is EAC?
Estimate at Completion — the project's current forecast of total cost when the work is finished. It combines Actual Cost (already spent) with Estimate to Complete (forecast for remaining work).Which EAC formula should I use?
It depends on the assumption you want to embed. CPI-only assumes future performance matches the past; CPI×SPI assumes schedule pressure will erode cost performance; bottom-up rebuilds the estimate from scratch. Best practice is to compute several and triangulate.How often should EAC be updated?
At least monthly during execution, and at every major stage gate. Quarterly is too slow for projects with volatile performance; weekly is usually too noisy.What is the difference between EAC and BAC?
BAC (Budget at Completion) is fixed at baseline. EAC moves with current performance and forecasts future spend. The difference between them is the Variance at Completion (VAC).Should EAC include contingency?
It depends on policy. Many organisations report two EACs: one excluding contingency (base forecast) and one including expected contingency draws (managed forecast). The choice should be governed, not informal.Can EAC go down?
Yes — if early periods were unfavourable and the team recovers, or if previously identified risks fail to materialise and contingency is released. Downward EAC revisions are rare but legitimate.What is TCPI?
To-Complete Performance Index — the future cost efficiency required to hit BAC (or the EAC). It is a sanity check on the EAC: if TCPI is much higher than current CPI, the forecast is not credible.How is EAC used in agile?
Compute EAC using cost per story point or per feature, the remaining backlog (with confidence ranges), and current velocity. Pair with a burn-up chart that exposes scope growth — the combination gives a credible programme-level forecast.What is a common misconception about Estimate at Completion (EAC)?
That the topic is well-defined across all references. In practice, definitions vary between PMBOK, PRINCE2, AACE and ISO 21500 — this entry uses the definition most aligned with field practice on capital projects, and flags where the standards diverge.Which related encyclopedia entries should I read alongside Estimate at Completion (EAC)?
Read Earned Value Management, Critical Path Method and the DCMA 14-point assessment next. The full A–Z is available in the PMMilestone Encyclopedia, and quick one-line definitions live in the PM Glossary on the flagship platform.How does Dr. Hassan Eliwa's research treat Estimate at Completion (EAC)?
Dr. Hassan Eliwa's research focuses on owner-side project controls, schedule integrity and forensic delay analysis on capital construction and power programmes. Estimate at Completion (EAC) is treated through that lens — what a planning or controls engineer is expected to do with it on a live project, not its textbook definition alone. See the full research library at PMMilestone Research Articles.How is Estimate at Completion (EAC) defined on PMMilestone Research & Insights?
A forward-looking forecast of the total cost (or duration) of a project at completion, derived from current performance data and assumptions about future performance. For the full treatment, see the definition, principles, applications and related entries above — every encyclopedia entry follows the same research-grade structure.
People also ask
Follow-up questions practitioners search for next — each one points to the calculator, template or reference entry that answers it.
Which book goes deeper than this entry?
Practitioner field handbooks with worked numerical examples. Books & Publications ↗
Which calculator on PMMilestone.org applies here?
The integrated EVM workbook covers most cost-schedule diagnostics. EVM Calculator ↗
Where is this in the glossary?
Quick-lookup definitions across 1,200+ PM terms. PM Glossary on PMMilestone.org ↗
Which learning track covers this end-to-end?
Structured tracks from beginner planner to programme controls director. Project Controls Academy ↗
Related Entries
More in Cost
- Letter BBudget Control
The disciplined monitoring of project spend against the approved budget through commitments, accruals, and variance reporting.
- Letter BBurn Rate
The speed at which a project consumes budget or capacity per unit of time — the single fastest indicator that cost or effort is drifting off plan.
- Letter CContingency Reserve
A controlled allocation of budget or schedule set aside to address identified risks that may materialise during execution, owned by the project manager and drawn down via a documented process.
- Letter CCost Control
The integrated discipline of estimating, baselining, monitoring, forecasting, and reporting project cost to drive corrective action and protect outcomes.
- Letter CCost Performance Index (CPI)
An earned value efficiency metric defined as Earned Value divided by Actual Cost, indicating how much value the project has earned for every dollar actually spent.
- Letter MManagement Reserve
A budget or time allowance held by senior leadership, outside the project baseline, to absorb unknown-unknown risks that cannot be quantified during planning.
Further reading on PMMilestone.org
Curated companion resources hosted on the flagship platform, PMMilestone.org.
- For practitioners who want to go deeper, the Project Controls Academy.
- Engineers researching this topic typically continue with the Learning Tracks.
- A practical companion to this entry is the Books & Publications.
- Closely related on the flagship platform is the EVM Calculator.
- Useful alongside this article is the Schedule Health Checker.
- Many readers follow this up with the PMMilestone.org knowledge hub.