Forecasting Projects in Progress With EAC: Formulas, Examples, and PMP Exam Guide
Estimate at Completion (EAC) is the forecasted total cost of a project based on current performance, combining money already spent with a revised estimate for the work still remaining. Project managers recalculate EAC at every reporting period to answer one question: given what has actually happened so far, what will this project really cost? Four distinct formulas answer that question, and choosing the wrong one produces a forecast that misleads the sponsor rather than informs them.
What Is Estimate at Completion (EAC) in Project Management?
Estimate at Completion (EAC) is a forecast of total project cost derived from current cost and schedule performance data, not the original budget. PMI’s Practice Standard for Earned Value Management documents EAC as a core forecasting output of the Control Costs process, distinct from the static Budget at Completion (BAC) set during planning.
EAC answers a forward-looking question. BAC answers a backward-looking one: what did we plan to spend? EAC replaces that plan with a projection grounded in actual results.
What Is the Relationship Between AC, EV, ETC, and EAC?
AC, EV, ETC, and EAC form a connected chain of cost values: AC and EV measure what has already happened, ETC forecasts what remains, and EAC forecasts the total. Each value feeds directly into the calculation of the next.
- Actual Cost (AC) measures total money spent on the project to date, pulled directly from accounting or timesheet records.
- Earned Value (EV) measures the budgeted value of the work actually completed to date.
- Estimate to Complete (ETC) measures the forecasted cost of the remaining, unfinished work only.
- Estimate at Completion (EAC) measures the forecasted total project cost, equal to AC plus ETC.
What Are the Four EAC Formulas?
PMI recognizes four EAC formulas, and the correct one depends on whether the original estimate is still valid, whether current variances are one-time or ongoing, and whether schedule performance affects remaining cost. Selecting a formula is a judgment call based on project conditions, not a fixed default.
- EAC = AC + Bottom-Up ETC — use when the original estimate is fundamentally flawed.
- EAC = AC + (BAC − EV) — use when current variance is a one-time event, not expected to recur.
- EAC = BAC / CPI — use when current cost performance is expected to continue unchanged for the remainder of the project.
- EAC = AC + (BAC − EV) / (CPI × SPI) — use when both cost and schedule performance are expected to influence the remaining budget.
AC = Actual Cost, BAC = Budget at Completion, EV = Earned Value, ETC = Estimate to Complete, CPI = Cost Performance Index, SPI = Schedule Performance Index.
The four formulas are demonstrated below using one continuous case study — an IT infrastructure rollout with a $200,000 Budget at Completion — so the same project produces four different forecasts depending on the assumption applied.
When Do You Use EAC = AC + Bottom-Up ETC?
Use EAC = AC + Bottom-Up ETC when the original cost or schedule estimate was built on incorrect assumptions and no longer reflects reality. This formula discards the flawed baseline entirely and replaces the remaining-work estimate with a fresh, ground-up calculation.
The IT infrastructure rollout has spent $50,000 (AC) when the vendor discloses that hardware pricing assumptions used in planning were outdated. The project team re-estimates the remaining work from scratch and produces a new bottom-up ETC of $180,000.
EAC = $50,000 + $180,000 EAC = $230,000
The original $200,000 budget is no longer relevant to this forecast — the new estimate stands on its own.
When Do You Use EAC = AC + (BAC − EV)?
Use EAC = AC + (BAC − EV) when a cost variance has already occurred but stems from a one-time event unlikely to repeat, so the remaining work is expected to proceed at the originally budgeted rate. This formula keeps the original budget’s assumptions intact for everything not yet completed.
The same rollout reaches a reporting period with AC = $90,000 and EV = $70,000. A single vendor invoicing error caused the overrun, and the vendor has confirmed pricing is corrected going forward.
EAC = $90,000 + ($200,000 − $70,000) EAC = $90,000 + $130,000 EAC = $220,000
When Do You Use EAC = BAC / CPI?
Use EAC = BAC / CPI when the cost variance observed so far reflects a consistent trend expected to continue for the rest of the project. This formula extrapolates current cost efficiency across the entire remaining budget.
At the same reporting period, AC = $90,000 and EV = $70,000, producing a CPI of 0.78 (EV / AC). The project manager determines the inefficiency is systemic — a recurring resourcing gap — not a one-time event.
EAC = $200,000 / 0.78 EAC = $256,410
When Do You Use EAC = AC + (BAC − EV) / (CPI × SPI)?
Use EAC = AC + (BAC − EV) / (CPI × SPI) when both cost performance and schedule performance are expected to influence the cost of the remaining work. This formula produces the most conservative forecast of the four, since schedule delays typically compound cost overruns.
With AC = $90,000, EV = $70,000, CPI = 0.78, and a Planned Value (PV) of $80,000, SPI calculates to 0.88 (EV / PV). The project manager determines that both the cost trend and the schedule delay will persist.
EAC = $90,000 + ($200,000 − $70,000) / (0.78 × 0.88) EAC = $90,000 + $130,000 / 0.6864 EAC = $90,000 + $189,394 EAC = $279,394
How Do You Choose the Right EAC Formula?
Choosing the right EAC formula requires reading the scenario for specific language about whether variances are one-time, ongoing, isolated to cost, or affecting schedule as well. Exam questions and real project reports both signal the correct formula through this language.
- Select AC + Bottom-Up ETC when the question states the original estimate was wrong or based on invalid assumptions.
- Select AC + (BAC − EV) when the question states the variance was atypical or a one-time event.
- Select BAC / CPI when the question states current performance is expected to continue.
- Select AC + (BAC − EV) / (CPI × SPI) when the question references both cost and schedule performance influencing the remainder.
- Default to BAC / CPI only when no other qualifying language is present, since it is the most commonly tested variant.
How Do You Interpret an EAC Result?
An EAC below BAC signals the project is forecast to finish under budget; an EAC above BAC signals a forecasted overrun; an EAC equal to BAC signals the project is tracking exactly to plan. The comparison between EAC and BAC is the single most useful output of the calculation for reporting to a sponsor.
- EAC < BAC — the project is trending under budget based on current performance.
- EAC = BAC — the project is trending exactly on budget.
- EAC > BAC — the project is trending over budget and requires corrective action or rebaselining.
What Is Variance at Completion (VAC) and How Does It Relate to EAC?
Variance at Completion (VAC) measures the projected difference between the original budget and the forecasted final cost, calculated as VAC = BAC − EAC. VAC translates the EAC forecast into a single number that directly states how far over or under budget the project is expected to finish.
Using the one-time-event scenario above, where EAC = $220,000:
VAC = $200,000 − $220,000 VAC = −$20,000
A negative VAC confirms the project is forecast to finish $20,000 over its original budget.
What Common Mistakes Do Project Managers Make When Calculating EAC?
The most common EAC mistakes involve applying the wrong formula for the stated assumption, confusing EAC with ETC, and treating a single data point as a stable trend. Each mistake produces a forecast that misrepresents the project’s true financial position.
- Confusing EAC with ETC, reporting total project cost when only remaining cost was requested.
- Applying BAC / CPI by default without checking whether the scenario actually describes an ongoing trend.
- Ignoring SPI entirely in situations where schedule delays are compounding cost overruns.
- Treating a single reporting period’s CPI as a permanent trend without reviewing prior periods.
- Forgetting to recalculate EAC at each reporting cycle, leaving stakeholders working from a stale forecast.
How Does EAC Appear on the PMP Exam?
The PMP exam tests EAC through scenario-based questions that require identifying which formula variant applies before performing the calculation. The exam rarely states the formula directly — recognizing the correct assumption from context is the tested skill.
Sample Question 1: A project has a BAC of $400,000. Current CPI is 0.8, and the project manager expects this cost efficiency to hold steady for the remainder of the work. What is the EAC? A) $320,000 B) $400,000 C) $500,000 D) $480,000
Sample Question 2: A project manager discovers that the original cost estimate relied on a vendor quote that has since been withdrawn. AC to date is $60,000, and the team produces a new bottom-up estimate of $210,000 for the remaining work. What is the EAC? A) $150,000 B) $210,000 C) $270,000 D) $60,000
Sample Question 3: A project has BAC = $150,000, AC = $80,000, and EV = $95,000. The project manager attributes the favorable variance to a one-time discount from a supplier that will not recur. What is the EAC? A) $135,000 B) $150,000 C) $158,000 D) $175,000
Sample Question 4: A project has EAC = $310,000 and BAC = $280,000. What does this forecast indicate, and what is the VAC? A) The project is under budget; VAC = $30,000 B) The project is over budget; VAC = −$30,000 C) The project is on budget; VAC = $0 D) The project is over budget; VAC = $30,000
Answers: 1) C — BAC / CPI = $400,000 / 0.8 = $500,000. 2) C — AC + Bottom-Up ETC = $60,000 + $210,000 = $270,000. 3) A — AC + (BAC − EV) = $80,000 + ($150,000 − $95,000) = $135,000, used for one-time, non-recurring variances. 4) B — VAC = BAC − EAC = $280,000 − $310,000 = −$30,000, indicating a forecasted overrun.
Frequently Asked Questions
What Is the Difference Between EAC and ETC?
EAC forecasts total project cost from start to finish, while ETC forecasts only the cost of the remaining, unfinished work. The two are directly related: EAC equals AC plus ETC.
Which EAC Formula Is Most Commonly Tested on the PMP Exam?
BAC / CPI is the most frequently tested EAC formula on the PMP exam, since it applies to the common scenario where current cost performance is expected to continue. Candidates should still recognize the other three variants, since exam questions test the ability to select the correct formula, not just calculate one.
Can EAC Be Lower Than Actual Cost?
EAC cannot be lower than Actual Cost under any standard formula, since EAC always equals AC plus a non-negative remaining-cost estimate. A result below AC signals a calculation error, most often a formula selected for the wrong scenario.
Does a Negative VAC Always Require Corrective Action?
A negative VAC signals a forecasted budget overrun and warrants review, but it does not automatically require corrective action if the sponsor has already approved the underlying cause, such as an approved scope change. Project managers distinguish between variance caused by approved changes and variance caused by performance problems before recommending a response.
