Estimate-at-Completion (EAC)

Estimate-at-completion (EAC) is a leading method of forecasting the final stage of the project. The advantage is, the cost forecast is hardly influenced by changes in the actual costs or the budget. Therefore, you are not required to register forecast frequently and still can have an accurate. To calculate the Variance-at-Completion (VAC), a minimum of one valid registered cost forecast is required for each part of the budgeted work in the project scope. You must set the Leading Forecast Method field to Estimate at Completion in the Project Accounting Parameters (tpppc0100s000) session to default this forecasting method for a project.

You can select the Generate from Budget check box to generate the cost forecast for a project using the Generate Cost Forecast by Cost Object (tpppc2216m000) session or the Generate Cost Forecast by Activity/Cost Type (tpppc2226m000)session. The initial estimate-at-completion method considers this budget by default. You can insert the cost forecast periodically for a project using various sessions. Possible scenarios:

• If parts of the project scope require a new forecast, specify a new cost forecast in these sessions for the current date.
  • Material Cost Forecast (tpppc2516m000) session
  • Labor Cost Forecast (tpppc2536m000) session
  • Equipment Cost Forecast (tpppc2556m000) session
  • Subcontracting Cost Forecast (tpppc2576m000) session
  • Sundry Cost Forecast (tpppc2596m000) session
  • Overhead Forecast (tpppc6106m000) session
• If a major part of the project scope requires a new cost forecast, specifying a new forecast can be laborious. So, you must generate the forecast records for a new date. Subsequently, you can also go to the generated cost forecast record data and modify the forecast values.

You can use these check boxes in the Project Accounting Parameters (tpppc0100s000) session to generate the forecast records:

• The Generate from Budget check box:

  You can select this check box if the modifications occur in the entire budget. The advantage is, the budget changes are displayed when the new values are added.

  The disadvantage is, the new forecast (budget value) overwrites the existing forecast values for parts of the project scope where there are no changes in the budget.

• The Generate from Previous Date check box:

  You can use this check box if the budget is completely modified. The advantage is that the previous forecast values are displayed when the new values are added.

You can monitor the result of the EAC method in these ways:

• Using the Variance-at-Completion (VAC) method. The (VAC) in the Control Inquiries sessions, the Performance Measurement sessions, and the Performance Measurement using EVM (tppss0702m000) session is calculated using this formula:

  Variance at Completion (VAC) = Budget at Completion (BAC) - estimate at completion (EAC)

• The specified forecast amount that is displayed as a planned cost in the Display Financial Analysis (tppss0701m000) session.
• Using the Estimate to complete (ETC) method.

  The Estimate-to Complete amount is calculated from Estimate- at-Completion (EAC) using this formula : Estimate to Complete (ETC) = Estimate at Completion (EAC) - Actuals.