What are the differences between BAC and EAC?

Estimate at Completion (EAC) is the current expectation of total cost at the end of a project. The EAC represents the final project cost given the costs incurred to date and the expected costs to complete the project. EAC is the expected spend where BAC (budget at completion) is the authorized spend on a project.

What does it mean if EAC is greater than BAC?

If the actual costs at time now (i.e., ACWPcum) are higher than the earned value at time now (i.e., BCWPcum), we know that the contractor is currently over running cost and that the contractor’s Estimate at Completion (EAC) may be higher than the BAC.

What’s the difference between ETC and EAC?

In it’s simplest form ETC is the Original Cost Budget (BAC) minus Actual Costs (AC). We can illustrate this as ETC = BAC – AC. Estimate At Completion (EAC): A perpetual forecast of the future value of the project at completion.

What is the difference between estimate to complete and estimate at completion?

Estimate at Completion is used for forecasting the amount of money at the end of the project. Estimate to Complete is the amount of money needed to finish the project at any point.

What does BAC mean in project management?

Budget at Completion

Budget at Completion (BAC) is a measure that is often used in earned value management to track the actual cost of a project against its forecasted budget.

How do you calculate EAC and Bac?

They are as follows:

  1. Formula 1. EAC = AC + Bottom-up ETC. This formula is used when the original estimation is fundamentally flawed. …
  2. Formula 2. EAC =BAC/Cumulative CPI. …
  3. Formula 3. EAC = AC + (BAC – EV) …
  4. Formula 4. EAC = AC + [BAC – EV / (Cumulative CPI x Cumulative SPI)]

What is EAC used for?

Equivalent annual cost (EAC) is the annual cost of owning, operating, and maintaining an asset over its entire life. EAC is often used by firms for capital budgeting decisions, as it allows a company to compare the cost-effectiveness of various assets that have unequal lifespans.

How is BAC calculated in project management?

Determine Budget at Completion (BAC)

The PMBOK® Guide gives this definition of BAC: “the sum of all budgets established for the work to be performed.” At the most basic level for example, if the original project budget is $25,000, then the project’s BAC is $25,000.

How do you Calculate EAC for a project?


In this case, we can use the EAC = AC + (BAC – EV) formula because we expect that the remaining budget is accurate but must account for the previous performance issues. Essentially, the EAC increases by the amount the actual cost exceeded the initial budget.

How is EAC calculated in earned value?

Formula Two

  1. Estimate at completion (EAC) = Actual cost (AC) + (Budget at completion (BAC) – Earned value (EV))
  2. Estimate at completion (EAC) = $35,000 + ($100,000 – $30,000) = $105,000.

What does EAC mean in contracts?

Estimate at Completion

Estimate at Completion (EAC) Formulas

The earned value EAC formula is based on the simple concept that the estimate at completion is equal to the amount of money already spent on the contract plus the amount of money it will take to complete the contract.

How do you calculate BAC earned value?

The Formula for Earned Value (EV)

The formula to calculate Earned Value is also simple. Take the actual percentage of the completed work and multiply it by the project budget and you will get the Earned Value. Earned Value = % of completed work X BAC (Budget at Completion).

Does EAC include management reserve?

Since contingency reserves are part of the cost baseline and management reserves are not, contingency reserves are included in the BAC and management reserves are not. EAC may or may not include management reserves.

What is the difference between earned value and actual cost?

Earned Value is also called Budgeted Cost of Work Performed (BCWP). Planned Value (PV) is determined by the cost and schedule baseline. Actual Cost (AC) is determined by the actual cost incurred on the project. Earned Value (EV) tells you, in physical terms, what the project accomplished.

What is Tcpi in project management?

A measure of the cost performance that is achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget.

What is IEAC in earned value?

Estimate at Completion (IEAC) is sig- nificant to project management. It is a. quick method facilitated by using Earned. Value Management to predict the final.

What is bottom up etc?

A fresh ETC can by found by estimating the cost of remaining (unfinished) work in the Work Breakdown Structure (WBS). It is called Bottom-up ETC. You can re-estimate the cost of remaining work components (work packages and activities) and then total them Upwards in the WBS to determine a Bottom-up ETC.

What is EAC formula?

(Estimate at Completion equals Actual Cost plus Estimate to Complete) When performance is steady and has not deviated too sharply from the original estimate, use the following formula: EAC = BAC/CPI. (Estimate at Completion equals Budget at Completion divided by Cost Performance Index).

What is 3 point estimation in project management?

Three-point estimating is a management technique to determine the probable outcomes of future events based on available information. The term refers to the three-points it measures: the best-case estimate, the most likely estimate, and the worst-case estimate.