Forecasting costs (etc, eac, vac) in Project Management
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How to calculate and interpret ETC, EAC, VAC, and TCPI as it is used in earned value analysis in project management. Download additional slides, videos, and resources at https://www.christiansonjs.com/ Signup for The Free-Range Technologist, a monthly newsletter filled with creative commons resources, useful apps, and lifehacks: https://mailchi.mp/f8f0219bc305/jscott
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Forecasting costs (etc, eac, vac) in Project Management
- 1. Forecasting
- 2. $0.00 $1,250.00 $2,500.00 $3,750.00 $5,000.00 0 Week 1 Week 2 Week 3 PV AC EV SV= -$507CV= -$933 $3000 SPI = 0.80 $2574 $2,067 CPI = 0.69 BAC (Project Total PV) = $4,134$4,134
- 3. Estimated Costs to Complete Remaining Work (ETC) ETC = BAC-EV EV / AC
- 4. Estimated Costs to Complete Remaining Work (ETC) ETC = BAC-EV CPI
- 5. $0.00 $1,250.00 $2,500.00 $3,750.00 $5,000.00 0 Week 1 Week 2 Week 3 PV AC EV SV= -$507CV= -$933 $3000 SPI = 0.80 $2574 $2,067 CPI = 0.69 BAC (Project Total PV) = $4,134 0.69
- 6. Estimated Costs to Complete Remaining Work (ETC) $2,067-$4,134 ETC = 0.69
- 7. Estimated Costs to Complete Remaining Work (ETC) ETC = $2,996
- 8. Estimate At Completion (EAC) EAC =AC +ETC
- 9. EAC = $2,996(ETC) $3,000(AC) $5,996(EAC) Estimate At Completion (EAC) +
- 10. $0.00 $1,500.00 $3,000.00 $4,500.00 $6,000.00 0 Week 1 Week 2 Week 3 PV AC EV
- 11. $0.00 $1,500.00 $3,000.00 $4,500.00 $6,000.00 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 PV AC EV If CPI doesn’t change, AC at end of project (EAC) is $5,996 EV, BAC, and PV will all be equal at end of project ($4134)
- 12. $0.00 $1,500.00 $3,000.00 $4,500.00 $6,000.00 0 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 PV AC EV If CPI doesn’t change, AC at end of project (EAC) is $5,996 EV, BAC, and PV will all be equal at end of project ($4134) VAC
- 13. Variance At Completion (VAC) VAC = BAC-EAC $5,996 (EAC) $4,134 (BAC) - -$1,862(VAC)
- 14. Get Back on Track
- 15. To Complete Performance Index (TCPI) TCPI=BAC-EV BAC-AC $2,067-$4,134 $3,000-$4,134 = $2,067 $1,134 = 1.88
- 16. TCPI 0 0.5 1 1.5 2 2.5 CPI 0.69 TCPI 1.88 ?
Editor's Notes
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- Methods Used to Revise Estimates of Future Project Costs: EACre Allows experts in the field to change original baseline durations and costs because new information tells them the original estimates are not accurate EACf Uses actual costs-to-date plus an efficiency index to project final costs in large projects where the original budget is unreliable
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- Estimated cost to complete remaining work
- VAC indicates expected actual over-or underrun cost at completion. VAC Cost variance at completion (BAC-EACre), where EACre is derived by estimators in the field. Or, alternatively, cost variance at completion (BAC-EACf), where EACf is derived from a formula using actual and earned value costs. VAC indicates expected actual over-or underrun cost at completion.
- TCPI = the amount of value each remaining dollar in the budget must earn to stay within budget, or what does our CPI need to be to get back on track