EAC, ETC, and VAC Explained: The Ultimate EVM Formulas Guide for PMP

Earned Value Management (EVM) is a powerful project management technique used to measure project performance and progress objectively. While basic EVM metrics like Cost Variance (CV) and Schedule Variance (SV) tell you where your project has been, the real power lies in forecasting where it’s going. This is where Estimate At Completion (EAC), Estimate To Complete (ETC), and Variance At Completion (VAC) come into play.

Mastering these EAC ETC VAC Formulas is absolutely critical for passing your PMP exam and for effective real-world project control.

Quick Recap: Foundational EVM Metrics

Before diving into forecasting, let’s briefly recap the core metrics:

• Planned Value (PV): The budgeted cost for work scheduled to be completed by a certain date.
• Earned Value (EV): The budgeted cost of the work actually completed by that date.
• Actual Cost (AC): The actual amount of money spent to complete the work by that date.
• Cost Variance (CV): Measures cost performance. CV = EV – AC. (Positive is under budget, Negative is over budget).
• Schedule Variance (SV): Measures schedule performance. SV = EV – PV. (Positive is ahead of schedule, Negative is behind schedule).
• Cost Performance Index (CPI): Measures cost efficiency. CPI = EV / AC. (CPI > 1 is efficient, CPI < 1 is inefficient).
• Schedule Performance Index (SPI): Measures schedule efficiency. SPI = EV / PV. (SPI > 1 is efficient, SPI < 1 is inefficient).

Understanding Cost Variance explained (CV and CPI) is particularly important for forecasting.

1. EAC (Estimate At Completion): Forecasting the Total Project Cost

Estimate At Completion (EAC) is the forecasted total cost of the project when all work is completed. It’s your best guess of the final price tag based on current performance. There are several ways to calculate EAC, depending on your assumptions about future performance:

EAC Formula 1: Based on Current CPI (Most Common)

• Formula: EAC = BAC / CPI
• Assumption: The cost performance experienced so far (CPI) is expected to continue for the remainder of the project.
• When to Use: This is the default formula used on the PMP exam unless otherwise specified.

EAC Formula 2: Based on Budgeted Rate

• Formula: EAC = AC + (BAC – EV)
• Assumption: Future work will be accomplished at the originally planned budgeted rate, regardless of past performance.
• When to Use: Use when you believe the past cost overruns were due to specific, non-recurring issues that have been resolved.

EAC Formula 3: Considering Both CPI and SPI

• Formula: EAC = AC + [(BAC – EV) / (CPI * SPI)]
• Assumption: Both cost and schedule performance indices are expected to influence the remaining work.
• When to Use: Use when the project is behind schedule and over budget, and you believe both factors will impact future costs (e.g., needing overtime or expedited shipping).

EAC Formula 4: New Bottom-Up Estimate

• Formula: EAC = AC + Bottom-up ETC
• Assumption: Past performance is not a good predictor of the future. The remaining work needs a completely new, detailed estimate.
• When to Use: Use when significant changes have occurred, making historical performance irrelevant.

2. ETC (Estimate To Complete): Forecasting Remaining Costs

Estimate To Complete (ETC) is the forecasted cost required to complete the remaining work on the project from the current point forward.

ETC Formula 1: Based on New Estimate (Most Reliable)

• Formula: ETC = Re-estimate of Remaining Work (Bottom-up ETC)
• Assumption: The most accurate way to know the remaining cost is to re-estimate the remaining tasks in detail.

ETC Formula 2: Based on Original Budgeted Rate

• Formula: ETC = BAC – EV
• Assumption: The remaining work will be completed at the originally planned cost rate. This is mathematically linked to EAC Formula 2.

ETC Formula 3: Based on Current CPI

• Formula: ETC = (BAC – EV) / CPI
• Assumption: The cost performance to date (CPI) will continue for the remaining work. This is mathematically linked to EAC Formula 1.

3. VAC (Variance At Completion): Forecasting Budget Surplus or Deficit

Variance At Completion (VAC) is the forecasted difference between the original budget (BAC) and the expected total cost (EAC) at the end of the project. It tells you if you’re projected to finish under or over budget.

• Formula: VAC = BAC – EAC

Interpretation:

• • VAC > 0: Projected to finish under budget (Surplus).
  • VAC < 0: Projected to finish over budget (Deficit).
  • VAC = 0: Projected to finish exactly on budget.

Why EAC, ETC, and VAC are Critical for PMP Success

These forecasting formulas are heavily tested on the PMP exam. You need to:

• Memorize the Formulas: Know the different EAC/ETC formulas and when each assumption applies.
• Interpret the Results: Understand what EAC < BAC (under budget) or ETC > (BAC – EV) (remaining work more expensive than planned) means for the project.
• Apply to Scenarios: Be ready to choose the correct EAC formula based on a PMP exam scenario description (e.g., “The team believes past performance will continue…” implies using EAC = BAC / CPI).

These metrics are fundamental to proactive Project Integration Management and demonstrating control over project outcomes.

Conclusion: Look Ahead with EVM Forecasting

While basic EVM tells you your current status, EAC, ETC, and VAC provide the crucial forward-looking insights needed for effective project control. By mastering these EVM Formulas, you gain the ability to anticipate budget issues, communicate realistic forecasts to stakeholders, and make data-driven decisions to keep your projects on track.

Keep advancing in your PMP journey — explore our other in-depth guides

• Agile vs Waterfall: Which Methodology is Right for Your Project?
• The 5 Scrum Events Explained: Purpose, Attendees, and Effective Execution
• Why PMP Aspirants Fail? – And How to Avoid Them
• Confused Between Agile, Hybrid, and Predictive? Here’s a Clear Comparison
• Why You Should Track Your Errors — and How to Do It Right

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