EAC Forecasting Methods: What Your Numbers Actually Mean

Estimate at Completion (EAC) is not a single number produced by a single formula. Different EAC methods encode different assumptions about how the project will perform going forward. Picking one method over another is a project-controls judgment call, and the number can shift meaningfully depending on which assumption you accept. This guide walks through the most common EAC methods, the assumption behind each and how EAC relates to ETC and VAC.

Method 1 — Performance-based EAC using CPI

EAC = BAC / CPI

The assumption: future cost performance will continue broadly in line with the cost efficiency observed to date. If the project has been running at CPI 0.90 for the last several cycles and the team believes those conditions are structural rather than temporary, this method projects forward using that trend.

Method 2 — Remaining work at budgeted rate

EAC = AC + (BAC − EV)

The assumption: past cost variance is treated as largely non-recurring and remaining work is expected to perform close to budget. Common when a specific one-off event (a design change, a weather stand-down, a delivery delay) explains the current variance and the team believes the underlying productivity is intact.

Method 3 — Performance-based EAC using CPI and SPI

EAC = AC + (BAC − EV) / (CPI × SPI)

The assumption: both cost and schedule performance to date will continue to influence remaining work. Useful when the project is under simultaneous cost and schedule pressure and the team believes both effects should be reflected in the forecast. This method is not universally correct — it is one option among several, and the weight it places on SPI needs to be defensible.

ETC — Estimate to Complete

ETC = EAC − AC

Once EAC is chosen, ETC is the runway still expected to be spent from the current data date to completion. It flows directly from whichever EAC method the project uses.

VAC — Variance at Completion

VAC = BAC − EAC

VAC captures the projected gap between the approved budget and where the current forecast expects the project to land. A negative VAC signals an expected overrun; a positive VAC signals expected under-run. VAC is the number executives usually want to see, but it inherits every assumption baked into the EAC method behind it.

Why the assumption behind the formula matters

The three EAC methods above can produce meaningfully different numbers on the same data. Consider a small worked example:

• BAC = $50M
• AC = $22M
• EV = $20M
• PV = $25M
• CPI = 20 / 22 ≈ 0.909
• SPI = 20 / 25 = 0.80

• Method 1 — EAC = 50 / 0.909 ≈ $55.0M → VAC ≈ −$5.0M
• Method 2 — EAC = 22 + (50 − 20) = $52.0M → VAC = −$2.0M
• Method 3 — EAC = 22 + (50 − 20) / (0.909 × 0.80) ≈ $63.3M → VAC ≈ −$13.3M

Three defensible methods, three different pictures — from a manageable $2M overrun to a $13.3M problem. None of these numbers is a prediction of the future. Each is a projection under a specific assumption. The value of running them side-by-side is that it shows the team how much of the forecast is being driven by the choice of assumption, not by the underlying data.

Choosing an EAC method for reporting

Practical guidance:

• Match the method to the assumption you are willing to defend to the client or steering committee.
• Document which method is used in every executive report. Do not silently switch methods cycle to cycle.
• When performance is volatile, running two methods in parallel and reporting a range is usually more honest than a single point estimate.
• Revisit the chosen assumption at every major re-baseline.