A project that has been executing for 6 months has accumulated actual costs of $900,000 against a plan of $800,000, with earned value of $750,000. The project manager forecasts using the EAC = AC + (BAC – EV) / CPI formula. If BAC = $2,000,000, what is the EAC approximately?

Question

Project Management (PMP) — Hard

A project that has been executing for 6 months has accumulated actual costs of $900,000 against a plan of $800,000, with earned value of $750,000. The project manager forecasts using the EAC = AC + (BAC – EV) / CPI formula. If BAC = $2,000,000, what is the EAC approximately?

Accepted Answer

To calculate the Estimate at Completion (EAC), the project manager uses the formula EAC = AC + (BAC - EV) / CPI. Given the actual costs (AC) of $900,000, earned value (EV) of $750,000, and budget at completion (BAC) of $2,000,000, the EAC is approximately $2,400,000. This is because the cost performance index (CPI) is EV/AC, which is $750,000/$900,000 = 0.833.