1.
Project Management
Key Concepts

2.
Cost Forecasting

3.
What is it?
As the project progresses, the project team may
develop forecasts for how much it will cost to
complete the project, and compare these to the
planned Budget (Budget at Completion).
Cost Forecasting

4.
What is it?
Project Forecasting techniques can include:
• Estimate at Completion (EAC)
• Estimate to Complete (ETC)
• Variance at Completion (VAC)
• To Complete Performance Index (TCPI)
Cost Forecasting
Project budget of $10,000, where 30%
completed, against 40% planned and $5,000
spent so far.

5.
Cost Forecasting
Estimate at Completion (EAC)
Is the expected total cost of completing all the work.
EAC = AC + BAC – EV (If future work will be completed at planned rate)
EAC = BAC/CPI) (If CPI remains the same)
EAC = AC + [(BAC – EV)/(CPI x SPI)] (If both the CPI and SPI influence the remaining work)
EAC = AC + Bottom-up ETC (If the initial plan is no longer valid)
Project budget of $10,000, where 30%
completed, against 40% planned and $5,000
spent so far.
EAC = $5,000 + ($10,000 - $3000)
= $5,000 + $7,000
= $12,000

6.
Cost Forecasting
Estimate at Completion (EAC)
Is the expected total cost of completing all the work.
EAC = AC + BAC – EV (If future work will be completed at planned rate)
EAC = BAC/CPI [CPI = EV/AC] (If CPI remains the same)
EAC = AC + [(BAC – EV)/(CPI x SPI)] (If both the CPI and SPI influence the remaining work)
EAC = AC + Bottom-up ETC (If the initial plan is no longer valid)
Project budget of $10,000, where 30%
completed, against 40% planned and $5,000
spent so far.
EAC = $10,000 / ($3,000/$5000)
= $10,000 / 0.60
= $16,667

7.
Cost Forecasting
Estimate at Completion (EAC)
Is the expected total cost of completing all the work.
EAC = AC + BAC – EV (If future work will be completed at planned rate)
EAC = BAC/CPI [CPI = EV/AC] (If CPI remains the same)
EAC = AC + [(BAC – EV)/(CPI x SPI)] (If both the CPI and SPI influence the remaining work)
EAC = AC + Bottom-up ETC (If the initial plan is no longer valid)
Project budget of $10,000, where 30% completed,
against 40% planned and $5,000 spent so far.
EAC = $5,000 + ($10,000-$3000)/((EV/AC) x (EV/PV))
(0.45)
= $5,000 + ($7,000/(0.60 x 0.75)) $15,555
= $20,555

8.
Cost Forecasting
Estimate to Complete (ETC)
Is the expected cost to finish all the remaining project work.
ETC = EAC – AC (Estimate at Completion – Actual Cost)
Project budget of $10,000, where 30% completed,
against 40% planned and $5,000 spent so far.
($12,000)
ETC = ($5000 + ($10,000-$3,000)) - $5,000
= $7,000

9.
Cost Forecasting
Variance at Completion (VAC)
Is the estimated difference in cost at the completion of the project.
VAC = BAC – EAC
Positive: Ahead of Schedule; Negative: Behind Schedule
Project budget of $10,000, where 30%
completed, against 40% planned and $5,000
spent so far.
($7,000)
VAC = $10,000 – ($5000 + ($10,000-$3,000))
= -$2,000

10.
Cost Forecasting
To Complete Performance Index (TCPI)
The efficiency that must be maintained in order to complete your
project as planned.
• TCPI = (BAC – EV)/(BAC – AC)
• > 1 Harder to Complete, < 1 Easier to Complete
Project budget of $10,000, where 30%
completed, against 40% planned and $5,000
spent so far.
TCPI = ($10,000 - $3,000) / ($10,000 - $5000)
= $7,000 / $5,000
= 1.4 (harder to complete)