cost management -- EAC

Submitted by vijayavadrevu on Sat, 03/23/2013 - 11:56

 Jim performs a periodic analysis of his project. He notices the variances his project is experiencing are due to a one time unexpected expense. Considering the variances to date have been atypical, which formula should Jim use in calculating a revised estimate at completion (EAC)?

 

Ans is given as

EAC = AC+BAC-EV

 

How to arrive at this, from the formulae known, namely EAC = BAC / CPI and CPI=EV/AC?

 

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AP

Sat, 03/23/2013 - 12:26

Typical - Some variances have occured and it is expected to continue in future too.

Atypical - Some variances have occured and it is not expected to continue in future.

Formulae:

EAC ‘fundamentally flawed’ = AC + ETC

EAC ‘Typical’ = BAC / CPI

EAC ‘atypical’ = AC + (BAC – EV)

EAC considering both CPI & SPI = AC + [(BAC-EV)/(CPI*SPI)]

vijayavadrevu

Sat, 03/23/2013 - 13:11

 Sir,

can you please explain what is meant by EAC ‘fundamentally flawed’

Regards

Vijaya

 

AP

Sat, 03/23/2013 - 13:32

It means that while doing the BAC, there was some major flaw or discrepancy in calculation or assumption or any other factor which made the BAC to be deemed invalid. In such a case, the EAC will be the actual cost upto that point plus the bottom up ETC.

vijayavadrevu

Sat, 03/23/2013 - 13:44

 Thank You !!!