Estimate atcompletion
The budget is where you started.
The budget is where a job started. The estimate at completion is where it is actually heading, projected from the cost already in the ground. Getting it right, and early, is the difference between managing an overrun and reporting one.
What estimate at completion is
Estimate at completion, or EAC, is the current forecast of what a job will actually cost when it finishes. It takes the cost already incurred and projects the rest of the work, so it replaces the original budget as the number a controller manages against once real data exists.
The budget at completion, BAC, is where you planned to land. EAC is where you are heading. The gap between them, variance at completion, is the forecast overrun or underrun, and it is the earliest hard number that says a job is drifting off its money.
Four ways to forecast it
There is no single EAC. Each method makes a different assumption about how the remaining work will run, and the right one depends on whether the variance so far will continue.
| Method | Formula | Use it when |
|---|---|---|
| Budgeted rate | AC + (BAC − EV) | The variance so far was a one-off; the rest runs at plan. |
| CPI-based | BAC ÷ CPI | Current cost efficiency is the best guide to the rest of the job. |
| Cost + schedule | AC + [(BAC − EV) ÷ (CPI × SPI)] | Both cost and schedule pressure will keep working against you. |
| Bottom-up | AC + re-estimated ETC | The original estimate no longer holds; re-price the remaining work by hand. |
A worked example
A job has a budget at completion of $40.0M. Cost incurred to date is $18.0M and earned value is $17.1M, so the cost performance index is 0.95. The budgeted-rate method forecasts $40.9M. The CPI-based method, which assumes today’s efficiency holds, forecasts $42.1M. Variance at completion is −$2.1M, a forecast overrun. The methods disagree by more than a million dollars, which is the point: report the range and the assumption behind each, not a single number.
Budget against forecast
The cost baseline against where the job is projected to land at current efficiency. The amber band is the variance at completion, the forecast overrun that a budget report alone would never show until the money was gone.
EAC, ETC, and the honest forecast
Estimate to complete, ETC, is the forecast cost of only the work left. EAC is simply cost incurred to date plus ETC. You can derive ETC from a performance index, which extrapolates the past, or re-estimate it bottom-up when the remaining scope has genuinely changed.
The formula-based forecasts are fast and objective, and they are the right floor while the job is running to type. But a formula only ever projects the past forward. When a major sub falls over or the design shifts, only a fresh bottom-up ETC tells the truth, and a disciplined controller carries both so the two can be reconciled.
A single EAC number hides the uncertainty behind it. The view below carries the forecast cost against the baseline alongside the range of likely finish dates, so the reader sees not just where the job is heading but how confident the projection is.
Completion Forecast
PODCompletion distribution
Confidence
Variance & cost
Four ways it goes wrong
BAC is what the job was sold at, not where it is heading. Reporting BAC as the estimate at completion hides every overrun until the money is already spent.
The budgeted-rate method assumes the rest of the work runs at plan. On a job that is already over on CPI, that is usually wishful; the CPI-based method is the more honest floor.
A job that is behind burns overhead longer, so schedule pressure feeds the cost forecast. The cost-plus-schedule method exists precisely because the two do not move independently.
Formula-based EAC extrapolates the past. When the remaining scope has genuinely changed, only a bottom-up re-estimate of the estimate-to-complete tells the truth.
A month-old forecast vs a current one
An EAC is only useful while there is still time to act on it. The difference between a forecast you can steer by and one you cannot is entirely about how fresh the cost data behind it is.
- ·Actual cost is re-keyed from the accounting system on a lag
- ·CPI and EV are recomputed by hand in a spreadsheet beside the budget
- ·The forecast lands after the period it describes has already closed
- ·By the time the overrun shows, the window to act on it is gone
- ·POD reads cost reports and pay applications as they arrive
- ·Actual cost, earned value, and the budget baseline stay current per project
- ·The inputs a cost-to-complete forecast needs are never a month behind
- ·The drift shows while there is still a period left to correct it
POD reads your cost reports and pay applications and keeps actual cost, earned value, and the budget baseline current, so the forecast is built on today’s numbers. It pairs with earned value management, budget vs committed, and the WIP schedule. None of the three is the full story on its own.
The project controls library
The pillar guide: where a cost forecast sits among schedule, commitments, and earned value on a live job.
CPI and SPI, the two indices every EAC formula leans on, and how they are derived.
The buy-out buffer that protects contingency before an overrun ever reaches the forecast.
The billing side of the same job: what you have invoiced set against what cost progress says you earned.
How budgets actually blow, and the drift a live forecast flags long before the money is gone.
Tracking commitments and actuals against budget: the source data a cost-to-complete forecast reads from.
Estimate at completion questions
What is estimate at completion (EAC) in construction?▾
Estimate at completion is the current forecast of what a job will actually cost by the time it finishes, based on cost incurred to date and an assumption about how the remaining work will run. It replaces the original budget as the number to manage against once real cost data exists.
How is EAC calculated?▾
There are four common methods. Budgeted rate is actual cost plus the remaining budget. CPI-based is budget at completion divided by the cost performance index. Cost-plus-schedule divides the remaining budget by CPI times SPI. Bottom-up adds a fresh re-estimate of the work left to the cost already incurred. Which one is right depends on whether the past variance will continue.
What is the difference between EAC and BAC?▾
Budget at completion (BAC) is the cost baseline the job was planned and sold against. Estimate at completion (EAC) is the live forecast of where it will actually land. Variance at completion, BAC minus EAC, is the forecast overrun or underrun.
What is ETC (estimate to complete)?▾
Estimate to complete is the forecast cost of only the work remaining, from today to the end. EAC equals actual cost incurred to date plus ETC. You can derive ETC from a performance index or re-estimate it bottom-up.
Which EAC method should I use?▾
Use CPI-based as the honest default when current efficiency is the best guide to the rest of the job, cost-plus-schedule when the job is also behind, and a bottom-up re-estimate when the remaining scope has genuinely changed. Reporting a range across methods is more useful than a single number.
How does POD help forecast cost at completion?▾
A forecast is only as current as the cost data behind it. POD reads your cost reports and pay applications as they arrive and keeps actual cost, earned value, and the budget baseline current per project, so the inputs a cost-to-complete forecast needs are never a month behind.
POD keeps the forecast inputs current
Begin with the free budget tracker, then let POD read the cost reports and pay applications already flowing through your jobs, so the inputs behind the estimate at completion are always current.