Is my calculation for EAC correct?

Submitted by y0zh on Wed, 05/08/2013 - 07:35

You are assigned as the project manager to a project which had a one-time cost variance in the past caused by unexpected rework which has meanwhile been finished.


You perform earned value analysis and get the following results:
EV: 250,000; PV: 200,000; AC 275,000


BAC is 500,000.


What is EAC?



BTC=BAC-PV=500,000-200,000=300,000


lapse=PV-EV=-50,000


EAC=AC+BTC+lapse=275,000+300,000-50,000=525,000


 

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rwmv

Wed, 05/08/2013 - 08:28

Estimate at Completion= Actual cost + (Budget at Completion-Earned Value)
EAC- AC+(BAC-EV)
  

275000+(500,000-250,000)
 

EAC=275,000+250,000
EAC= $525,000
 

y0zh

Wed, 05/08/2013 - 08:48

Thanks,


is BTC some old stuff for PMBOK? Why we can't use below formula EAC = BTC + lapse + AC


-------------------------------------------------


Your project exceeded costs in the past caused by an underestimation of resource costs in the cost baseline:


PV: $1,200,000, EV = $1,000,000, AC = $1,200,000


You expect the underestimation to influence the future as much as it did in the past.


If the BTC (Budget to Complete) is at $1,000,000, what should be your new EAC (Estimate at Completion)?


A. $1,800,000


B. $2,000,000


C. $2,200,000


D. $2,400,000


Answer:


You know your Actual Cost $1,200,000 and Budget To Complete $1,000,000, and you also know that your baseline has a lapse = PV - EV = $1,200,000 - $1,000,000 = $200,000 (you wouldn't have that if estimated properly, right?). So, Estimate at Completion now would be an amended value of the expected cost of completing project work plus the actual cost.


So, EAC = BTC + lapse + AC = $1,000,000 + $200,000 + $1,200,000 = $2,400,000

BK

Wed, 05/08/2013 - 14:16

 Not sure about BTC though, in this case formula used should be

EAC= AC+ BAC-EV

as the future variance is atypical from the present.