Example (EAC) Case-II:

You have a project with a budget of 600,000 USD. During execution phase, an incident happens which costs you a lot of money. However, you are sure that this will not happen again, and you can continue with your calculated performance for the rest of the project.

To date you have spent 300,000 USD, and the value of the completed work is 275,000 USD. Calculate the Estimate at Completion (EAC).

Solution:

Since the cost elevation is temporary in nature and the rest of the project can be completed as planned, in this case you will use the formula:

EAC = AC + (BAC - EV)

Given in the question,

Actual Cost (AC) = 300,000 USD

Budget at Completion (BAC) =

600,000 USD Earned Value (EV) =

275,000 USD

Hence,

EAC = 300,000 + (600,000 - 275,000)

= 300,000 + 325,000

= 625,000

Hence, the Estimate at Completion is 625,000 USD.

Practice Question:

You have a project with a budget of 400,000 USD. During execution phase, one machine fails which costs you a lot of money. However, you are sure that this will not happen again, and you can continue with your calculated performance for the rest of the project.

To date you have spent 200,000 USD, and the value of the completed work is

180,000 USD. Calculate the Estimate at Completion (EAC).