Work Estimate at Completion (EAC) and Work Estimate to Complete (ETC) are cost projections.
The work that is still not done is the remaining hours left in the task (ETC) and add the cost of that pending work to the cost of the work that has been done (EAC).
We'll start with an example of the simplest one, which is ETC:
- A task which costs $100/hour and has a work value of 40 hours is 50% complete
- The 50% of those 40 hours which is not done is 20 hours multiplied by $100, or $2000
- ETC does not take into account any actual hours entered by the resources
- Actual hours are not part of the ETC calculation
Next is EAC, which DOES take into account the actual hours entered by resources to date
- If the task in the above example has 25 hours of time entry at the $100/hour rate
- The cost of the task for the initial 50% of completion is $2500
- Add the spent $2500 to date to the ETC of $2000 and the EAC is $4500
The key to EAC is that it does not project any performance analysis into the remaining work.
It assumes that the remaining work will be completed on budget even if the previous work was over or under budget.
For a projection which assumes the remaining work will be performed at the same level of performance as the previous work, use the Work Estimate at Completion CPI (cost performance index).
Continuing with our example above, let's use the EAC CPI
- The example above would project that the remaining 20 hours/50% will incur the same 25 actual hours that were required to complete the first 20 hours/50%
- EAC CPI would be $5000
Thanks PMI for all your calculation rules!! Now let's go be productive!