Estimate at Completion: EAC Formula, Calculation & Examples

A project manager’s worst fear is a budget that spirals out of control. Surveys show that the average cost overrun is about 27%, and more than 15% of projects experience cost overruns of 200%. Only a quarter of projects finish within10% of their initial budgets and timelines. In an era where stakeholders expect predictability, learning to forecast a project’s final cost is vital.

That’s where Estimate at Completion (EAC) comes in. EAC helps project managers predict the total cost at the end of a project based on current Performance, actual costs, and the work remaining. 

In today’s blog post, I will explain the estimate at Completion. I will explain the formulas, share examples, offer practical tips, and connect the dots between EAC and modern project management trends. Whether you manage construction, software, or research projects, this post will help you forecast costs with greater confidence.

Let us get started.

What is the Estimate at Completion?

Definition. The Project Management Institute defines EAC as the expected total cost of completing all work, calculated as the sum of actual costs plus the estimated cost to finish the remaining work. In simpler terms, EAC is a prediction of the total project cost once it’s completed.

Unlike the Budget at Completion (BAC) – the initial approved budget – EAC is dynamic. It factors in real data such as Actual Cost (AC), Earned Value (EV), and the Estimate to Complete (ETC). By comparing the original plan to actual Performance, EAC tells you whether you’re on track or need to adjust course.

Why EAC Matters

Modern projects move quickly, and budgets can change overnight. A recent PMI Pulse of the Profession 2025 survey found that project professionals with strong business and financial acumen deliver better budget adherence (73% Vs 68%) and higher schedule adherence (63% Vs 59%). That means teams that continually monitor their budgets and adjust their forecasts outperform those who don’t.

There’s also a human side. I once managed a project that was two months behind schedule. Our forecast suggested we’d need a 10% budget increase. By calculating EAC early and communicating transparently, we secured extra funding and saved the project. 

Four Ways to Calculate EAC

The PMBOK Guide outlines four standard EAC formulas based on different assumptions. Choosing the right EAC formula depends on how you expect future Performance to relate to past Performance:

Scenario	Assumption	Formula	Use Case
Case 1: Future Performance will follow current cost efficiency	You believe the cost performance index (CPI) will stay the same.	EAC = BAC / CPI	Use when the project continues as it has been performing.
Case 2: Cost deviation was one-off; future work will follow the original plan	A one-time incident caused higher costs, but Performance will return to the planned rate.	EAC = AC + (BAC – EV)	Use after unforeseen events that aren’t expected to repeat.
Case 3: Both cost and schedule performance affect future costs	You must meet the deadline despite being behind schedule; both CPI and Schedule Performance Index (SPI) matter.	EAC = AC + [(BAC – EV) ÷ (CPI × SPI)]	Use when schedule delays and cost overruns occur together.
Case 4: The Original estimate was flawed	You need a new bottom-up estimate for the remaining work.	EAC = AC + ETC	Use when the existing cost estimate is no longer reliable.

These formulas use the following variables:

• AC (Actual Cost): money spent so far.
• EV (Earned Value): value of the completed work.
• BAC (Budget at Completion): the approved total budget.
• CPI: cost efficiency ratio (EV ÷ AC).
• SPI: schedule efficiency ratio (EV ÷ Planned Value).
• ETC: a new estimate of remaining work.

Choosing the right formula ensures your EAC reflects reality. Many project managers default to the CPI-based method (Case 1) because it’s straightforward and commonly tested on PMP certification exams, but the other formulas are equally important for different situations.

The Impact of EAC on Project Success

Organizations that use Estimate at Completion and Earned Value Management see great results. 

EAC helps achieve high project success rates, stronger stakeholder support, and savings across the entire project portfolio. For example, a BCG report says cost management is the top priority for executives due to economic challenges, and EAC helps make projects more reliable.

Put simply, EAC is crucial—it’s your advantage in a world where less than half of projects stay within budget.

Examples of Estimate at Completion

Let’s walk through each case using simplified numbers. These examples illustrate how the formulas work and why choosing the right scenario matters.

Case 1: Future Performance Mirrors Past Cost Performance (EAC = BAC ÷ CPI)

Example #1

Your project should finish in 12 months and cost 100,000 USD. Six months have passed. You’ve spent 60,000 USD, but only 40% of the work is done.

Given:

Budget at Completion (BAC) = 100,000 USD
Actual Cost (AC) = 60,000 USD

Planned Value (PV):

Since the project is 12 months long and 6 months have passed, you can assume 50% planned progress.

So, PV = 50% of 100,000 = 50,000 USD.

Earned Value (EV) = 40% of 100,000 = 40,000 USD.

Now find the Cost Performance Index (CPI):

CPI = EV / AC
= 40,000 / 60,000
= 0.67

Next, calculate the Estimate at Completion (EAC):

EAC = BAC / CPI
= 100,000 / 0.67
= 149,253.73 USD

So the updated total cost for the project is about 149,253.73 USD.

This means that if the project continues to perform with a CPI of 0.67, you’ll need about 149,253.73 USD to finish it.

Case 2: A One-Time Incident [EAC = AC + (BAC – EV)]

Example #2

Your project has a budget of 500,000 USD. An unexpected issue during execution increased the cost, but you’re sure it won’t happen again. You expect the rest of the project to follow the original plan.

So far, you’ve spent 200,000 USD, and the value of the completed work is 175,000 USD.

To find the Estimate at Completion (EAC), use this formula because the extra cost was a one-time event:

EAC = AC + (BAC – EV)

Given:

Actual Cost (AC) = 200,000 USD
Budget at Completion (BAC) = 500,000 USD
Earned Value (EV) = 175,000 USD

Now calculate:

EAC = 200,000 + (500,000 – 175,000)
= 200,000 + 325,000
= 525,000 USD

So the Estimate at Completion is 525,000 USD.

Case 3: Combined Cost and Schedule Impact (EAC = AC + [(BAC – EV) ÷ (CPI × SPI)])

Example #3

Your project has a fixed deadline and a budget of 500,000 USD. So far, you’ve spent 200,000 USD, and the value of the work completed is 175,000 USD. According to the schedule, you should have earned 225,000 USD by now.

Given:

Budget at Completion (BAC) = 500,000 USD
Actual Cost (AC) = 200,000 USD
Earned Value (EV) = 175,000 USD
Planned Value (PV) = 225,000 USD

First, calculate SPI and CPI:

SPI = EV / PV
= 175,000 / 225,000
= 0.78

CPI = EV / AC
= 175,000 / 200,000
= 0.88

Now calculate the Estimate at Completion (EAC):

EAC = AC + [(BAC – EV) / (CPI × SPI)]
= 200,000 + (500,000 – 175,000) / (0.88 × 0.78)
= 200,000 + 325,000 / 0.69
= 200,000 + 471,000
= 671,000 USD

So the Estimate at Completion is 671,000 USD.

Case 4: Re-Estimating the Remaining Work (EAC = AC + ETC)

Example #4

You’re building an office for a government department for 500,000 USD. So far, you’ve spent 200,000 USD, and the finished work is valued at 175,000 USD. You realize your original cost estimate wasn’t accurate, so you decide to recalculate the cost for the remaining work.

After meeting with your team, the new estimate shows you’ll need 400,000 USD to finish the project.

Given:

Budget at Completion (BAC) = 500,000 USD
Actual Cost (AC) = 200,000 USD
Earned Value (EV) = 175,000 USD
Bottom-Up Estimate to Complete = 400,000 USD

Use this formula:

EAC = AC + Bottom-Up Estimate to Complete
= 200,000 + 400,000
= 600,000 USD

So the Estimate at Completion is 600,000 USD.

EAC Vs BAC Vs ETC

Understanding the difference between EAC, BAC, and ETC can be confusing.

• Budget at Completion (BAC): The total authorized budget at project start. It’s static and doesn’t change unless there’s an approved change request.
• Estimate to Complete (ETC): A forecast of the remaining work’s cost. It can be a simple prediction or a detailed bottom-up estimate.
• Estimate at Completion (EAC): A dynamic projection of the total cost considering actual performance and remaining work.

The following table shows the key differences between EAC, BAC, ETC.

Metric	Definition	When to Use	Key Difference
EAC	Total projected cost (AC + future estimate).	Mid-project forecasting.	Dynamic; includes past and future.
BAC	Original total budget.	Planning phase baseline.	Static; set at start, no adjustments.
ETC	Cost for remaining work only.	When re-baselining.	Forward focused; ignores sunk costs.

Think of BAC as the initial promise, ETC as the updated to-do list, and EAC as your best guess about the final bill. EAC is continually adjusted as you learn more about project performance.

Improving EAC Accuracy: Best Practices

Better cost forecasting is both an art and a science. Here are proven strategies to improve your EAC calculations, supported by recent research and my own experience:

• Make Accurate Initial Estimates: Invest time in bottom-up estimates, involve subject matter experts, and cross-check assumptions. Detailed early planning reduces the risk of huge corrections later.
• Scenario Planning and Contingency Reserves: Build contingency reserves for risks and unexpected events. A proactive approach helps you manage uncertainties.
• Monitor Performance Continuously: Track metrics like CPI and SPI in real time. Use project management software to quickly flag deviations.
• Optimize Resource Allocation: Reallocate or optimize resources based on performance data. A team that communicates and adapts can recover from schedule slips without massive cost increases.
• Renegotiate Contracts When Necessary: If a contract term causes persistent overruns, renegotiate terms or find alternative suppliers.
• Foster Transparent Communication: Encourage open dialogue about risks and budget status. Studies show that communication issues account for 33% of project failures.
• Learn from Past Projects: Conduct post-project reviews to identify causes of cost overruns and apply lessons learned.
• Develop Financial Acumen: PMI’s 2025 survey showed that professionals with higher business acumen achieve better budget adherence and fewer project failures. Provide training and mentorship to build financial skills.

By applying these strategies, you’ll improve your cost forecasting and reduce surprises.

EAC and Modern Project Management Tools

Digital tools have transformed the way teams collect performance data. Time-tracking software, dashboards, and automation simplify earned value calculations, making EAC more accurate. For example, project management platforms that integrate cost tracking can alert you when CPI drops below 1.0, prompting you to recalculate EAC.

This survey highlights that only 25% of projects stay within 10% of budget, and 61% of project managers believe technology reduces project errors. These insights underscore the value of embracing modern tools. Consider pairing time tracking with your EAC calculations to validate actual hours and costs. Beyond improving accuracy, tools also free up time for value-added activities like risk management and stakeholder engagement.

FAQs

Q1. Why is EAC important for project managers?

EAC allows managers to make informed decisions, adjust resources, and communicate realistic budget expectations to stakeholders.

Q2. Can EAC change during a project?

Yes. EAC is dynamic and should be recalculated periodically or whenever significant scope, schedule, or cost changes occur.

Q3. What’s the difference between EAC and ETC?

ETC estimates the cost of remaining work alone, while EAC estimates the total project cost, including costs incurred and work remaining.

Q4. How does EAC support risk management?

By revealing cost variances early, EAC helps identify risks and inform corrective actions. It also guides decisions about contingency reserves and scope trade-offs.

Q5. When should you use the CPI-based EAC formula?

Use EAC = BAC ÷ CPI when you expect future cost performance to match past Performance. This is often the case in projects with predictable workflows and stable teams.

Q6. Do I always need to recalculate EAC?

Not always. If Performance is stable and within acceptable tolerances, recalculating EAC frequently may not add value. However, if CPI or SPI deviates significantly (e.g., below 0.9), it’s prudent to update EAC.

Summary

Estimate at Completion is more than a formula; it’s a mindset of continuous improvement. By regularly calculating EAC, you align financial forecasts with actual Performance. As the data show, professionals who take budgeting seriously enjoy higher success rates and lower failure rates.

EAC empowers you to manage expectations, secure necessary funding, and act confidently when the unexpected happens. In today’s competitive environment, that’s not just wise – it’s essential. Why wait until the end of your project to discover the cost? Use EAC to minimize surprises and guide your team toward success.

This post is the tenth part of a twelve-post series on Earned Value Management and project forecasting. If you found this page through a search or a shared link, take a moment to read the earlier posts first. They help the ideas in this one make more sense.

Here are the links to the other posts:

1. Earned Value Management
2. Elements of Earned Value Management
3. Budget at Completion in Project Management
4. Cost Variance in Project Management
5. Schedule Variance in Project Management
6. Cost Performance Index in Project Management
7. Schedule Performance Index in Project Management
8. Schedule Variance and Cost Variance
9. Schedule Performance Index and Cost Performance Index
10. Estimate at Completion (You are here)
11. Estimate to Complete
12. To Complete Performance Index

This topic is important from a PMP exam point of view.