The onset of any project is surrounded by many expectations and ideas that seem perfect when it is still on paper. Working diligently, planning every detail, and setting goals is often the right way to arrive at the gold pot at the rainbow’s end. To reach there, it is necessary to be ready for the unforeseen, mainly when it involves costs.

The good news is that there has been a powerful metric for guiding the stakeholders through changes and numbers. Estimate at Completion, EAC, in short, is the formula used to calculate the aggregate cost of the project that has encountered uncertainty. Its application will be essential to understanding the effects of unforeseen circumstances on future expenses, helping mitigate losses, and allocating project resources. In this article, you will learn how the formula operates and how you can apply this in your projects. 

What is EAC?

The present expectation of the project’s total costs once completed is as follows: This calculation is made by considering the total sum of the capital invested at the measurement point with the costs required to finish the work. When unexpected events occur, like unplanned expenses or delays, managers use EAC to reevaluate the total costs needed to complete the given project on time. In this context, the EAC helps the stakeholders measure the changes’ effects more precisely and better manage the available resources.

Running EACs regularly will be the smart move, as it reflects the expectancy of the concluding cost of the project, which is still in progress.

Don’t confuse EAC with ETC (Estimate to Completion). It’s crucial to make a fundamental observation. EAC calculates expected and accrued costs, while ETC is the expected costs for completing a project. Also, being conscious of the connection between EAC and BAC (Budget of Completion) is vital.


While both calculations estimate project costs, they apply to different stages. EAC accords with the project’s final cost forecast, which has already been underway, while BAC accords with the expense authorized at the project’s initial stage – the original budget. Practically, the EAC develops as it considers financial variations and unforeseen circumstances and has been calculated at varied moments throughout the project’s life cycle. However, BAC is static and determines a project’s EV (Earned Value).

For instance, a team calculates BAC as $150,000 for the one-year project. However, after four months, the delay in scheduling affected the project; hence, the team required more resources to finish the project on time. With these added costs, a fresh budget has been made, and the project cost is estimated at $200,000. In that case, spending $50,000 more than initially anticipated is essential, which makes EAC larger than BAC. It’s important to remember that in this example, eight more months are still left to finish the project. Many other unforeseen events might occur, making it necessary for a new EAC. During such instances, the challenge of the project managers is to reduce the effect of actionable expenses, increase the team’s performance, and reallocate resources. 

EAC and tracking the performance of a project

We understand that EAC is vital to guiding the project realistically through uncertain circumstances. If you want to succeed in uncertainty, EAC is a fantastic tool for monitoring the project’s performance. Because EAC is the calculation that indicates the final cost according to the information known at the time, it won’t be enough to use EAC reactively. You have to use it proactively as well.

When you estimate project costs periodically with EAC and compare the outcomes over time, you can track them much more accurately.

Another technique is to analyze EAC with other vital KPIs like BAC and CPI (Cost Performance Index). To skillfully manage spending, regularly estimate CPI, comparing EV and AC to gauge budget utilization accurately. By tracking all these metrics, the stakeholders will know the teams’ performance and can reallocate the resources to the activities and the tasks that require them at that time. These calculations and methods also help identify the potential obstructions that can seriously affect the project’s success, which are only very few of their multiple benefits.

Benefits of the “evolving EAC model”

We have a variety of methods to calculate EAC. However, utilizing the formula most consistent with your finances is vital to get a reliable outcome. You might need to filter the calculations during the project’s life cycle at the same period, referred to as the “evolving EAC model.” The agility in a way you estimate EAC has many benefits:

  • Helps assure earned value: Calculating EAC along with all other indicators allows the development of the latest strategies to offset and block the accumulation of negative influences on the project’s EV.
  • Identify waste: Regular calculation of EAC helps detect areas of overspreading that might impact the project’s progress.
  • Better resource allocation: The adaptive EAC model aids stakeholders in prioritizing and reallocating resources by adjusting budgets and teams

To better understand its benefits, let’s examine how EAC calculation will enable a project to deal with unforeseen expenditures.

Using EAC to acclimate the project when unknown expenses arise

Just imagine that you have been working at a mid-level civil engineering organization and supervising a new venture. Timetable at the initial stage projects a year of tasks split into four quarters. BAC is $700,000, which is comprised of all material and resource costs. The project plan suggests that the $400,000 of the given budget will be used up in the 1st quarter while the remaining $300,000 will be divided evenly in the later three quarters. As the investment power is high in the first phase, the team begins with a bang. However, after a month, when the work is in progress, an agency from the government will hit the organization with a penalty due to the regulatory oversight associated with the project and suspend the work for almost four weeks. To ensure accurate EAC in this new reality, we must consider the following variables:

  • How much money of the given budget has been spent so far
  • The new timeline estimation for that interruption
  • If there is any additional costs needed to finish the first stage
  • What will be the charges for the penalty
  • What will be the cost required to finish the following stages, provided the chances
  • Is there any additional loss of resources, like employees leaving the organization due to the interruption in the work

The above example illustrates the significance of BAC, as the overall purpose is always to maintain EAC lower than BAC. Allocating a portion of your project budget for unforeseen expenses is crucial in project planning. This budget buffering will help you avoid resource cuts, mitigate resources, and distribute remaining resources more effectively.

Excellent project planning, budgeting, and knowing when and how to use EAC help you keep projects precise and move toward triumph. However, these steps are only as acceptable as the tools used to carry them out.

How do I find out whether the EAC is right?

There are limitless variables that affect project management costs and, in turn, impact EAC calculations. Active tracking and categorizing costs during project planning ensure accurate BAC, leading to precise EAC calculations and budget adherence.

The sum of the excellent techniques and tools obtains the project’s success.

Overcoming unexpected challenges and obstacles is part of project management. The most excellent planners will also face unexpected crises that are insurmountable. EAC expertise and a seamless project management platform can mitigate critical contingencies, reducing them to manageable road bumps.