EAC = Estimated cost at Completion
One of the figures often included on project reports, and present in many PM tools, is the EAC and EAC variance. EAC stands for “Estimated Cost at Completion” and is equal to the actual cost of work performed so far + the remaining estimate to complete. Expressed as a formula of confusing ‘initialisms‘ this means that EAC = ACWP + ETC.
For projects the EAC represents the total projected cost of the project. At the very beginning of a project when there hasn’t been any spend, the EAC is equal to the Estimate to Complete (ETC) and this is the first project baseline. As a project executes changes happen and projects may start over-spending or under-spending. In these case the EAC will start to vary from the baselined value as the actual costs + the remaining estimates are either up or down from the original baseline. This variance is expressed as EAC variance. A negative EAC variance indicates a project that looks like it is going to come in under the original budget baseline figure. A positive EAC variance indicates that a project is likely to overspend relative to the baseline figure.
EAC may be expressed as a financial figure or as an effort (in hours) value. EAC can also be combined with agile burnup measures across projects.