# Need Help - Calculate EAC

Hi All,

I badly need your help guys.. I am very much confused on EAC formula.

Under which condition I should use EAC = BAC/CPI and when should we use EAC = AC+BAC-EV.

Can you please explain under which condition should I use this.

I am hereby providing an example in which I was not sure which formula I should use for EAC

Calculate the to-complete performance index of your project, based on EAC, given that the actual cost of your project is $125,000, cost variance is $65,000, and the budget at completion is $250,000.

Choice 1 .9

Choice 2 1.52

Choice 3 1.7

Choice 4 .3

Hemant Tandon

Thu, 04/18/2013 - 01:08

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## If the future project work

Ashu

Thu, 04/18/2013 - 03:21

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## Thanks Hemant

Hi Hemant,

Thanks for details explanation. This is really helpful. I have one more question to add, for TCPI when should we use BAC- EV/EAC-AC. here is one example

The actual cost of your project is $200,000, budget at completion is $325,000, and the cost variance is -$25,000. From the data above calculate the To-complete performance index of your project, given that , senior management did not agree to revise the estimate at completion based on current performance.

AC = 200,000

BAC = 325,000

CV= -25,000

Choice 1 0.7

Choice 2 1.2

Choice 3 0.8

Choice 4 1

Julbrown31

Thu, 04/18/2013 - 04:19

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## BAC/CPI is used when it is

BAC/CPI is used when it is TYPICAL.. (Which also means NOT FLAWED)

AC + BAC - EV is used when it is ATYPICAL (which means ABNORMAL- will not happen in the future )

AC + ETC is used when original assumptions are NO LONGER VALID - also when you need new estimates

in summary, you have to read scenario to know which equation to use. Good luck!

Hemant Tandon

Thu, 04/18/2013 - 05:17

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## TCPI is used for calculating

TCPI=Remaining Work/Remaining Budget

TCPI = (BAC-EV)/(BAC-AC)

TCPI = (BAC-EV)/(EAC-AC)

Thanks & Regards,

Hemant Tandon, PMP

pmpnewster

Sat, 04/27/2013 - 17:32

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## Hello Hemant,Have you

Hello Hemant,

Have you accidentally switched EAC and BAC in the denominators in your above post? Pls let us know.

Thanks.

Julbrown31

Thu, 04/18/2013 - 04:35

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## My assumption for this TCPI

My assumption for this TCPI question is that EAC should not be considered.. based on the line about senior management not wanting to revise.

The equation used would be BAC - AC / BAC - EV..

On the exam, it will say given EAC, please calculate TCPI .. But I can be wrong

Can someone confirm?

ANSWER IS B) 1.2

sspawar

Thu, 04/18/2013 - 07:21

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## Calculated answer would be

Calculated answer would be 1.145, it is nearer to 1.2, for one digit round off after decimal.

It can also be judged and marked option B without any calculation, because, all other tcpi values are below one or equal to 1, which are not possible.

the reason is that, project at this point is over budget and hence to get it completed in given amount later part ( remaining part) must be done with a CPI of above 1.

Jgrind07

Wed, 05/01/2013 - 21:17

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## Pawar,Can you please

Pawar,

Can you please elaborate the following point? It sounds intresting know some shortcuts can be used with out full calculation.

It can also be judged and marked option B without any calculation, because, all other tcpi values are below one or equal to 1, which are not possible.ThanksJaisspawar

Thu, 05/02/2013 - 01:09

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## My earlier reply in complete

My earlier reply in complete is like this:

Calculated answer would be 1.145, it is nearer to 1.2, for one digit round off after decimal.

It can also be judged and marked option B without any calculation, because, all other tcpi values are below one or equal to 1, which are not possible.

the reason is that, project at this point is over budget and hence to get it completed in given amount later part ( remaining part) must be done with a CPI of above 1.please read underlined sentence. it is reply of second question not of main q.

Jgrind07

Thu, 05/02/2013 - 03:47

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## Thanks, Pawar

Thanks, Pawar

BK

Thu, 04/18/2013 - 13:19

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## When to use this formula then

When to use this formula then :

EAC= AC + ((BAC - EV) / CPI)

As per my understanding this is the formula for typical variance.

any thought?

AP

Thu, 04/18/2013 - 21:13

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## Hi

EAC = AC + (BAC-EV)/CPI is the formula that was given in PMBOK guide third edition.

In fourth edition, the same formula is simplified to EAC = BAC / CPI. Both the formulae are correct.

Kindly refer this url which clearly derives the equation.

http://www.deepfriedbrainproject.com/2010/01/solving-estimate-at-completion-puzzle.html

pmpnewster

Sat, 04/27/2013 - 17:32

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## Hello Hemant,Have you

Hello Hemant,

Have you accidentally switched EAC and BAC in the denominators in your above post? Pls let us know.

Thanks.

Hemant Tandon

Sun, 04/28/2013 - 19:43

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## Yes....Thanks for

Yes....Thanks for highlighting it.

Regards,

Hemant, PMP