Digital Engineering Guide
BAC, EAC, ETC and VAC translate project performance into a forecast. Together they show the approved budget, the latest expected final cost, the cost still required and the expected budget variance at completion.
BAC — Budget at Completion
BAC is the total approved budget for the defined project scope within the performance baseline. It is not automatically equal to contract value or revenue.
EAC — Estimate at Completion
EAC is the current forecast of total project cost when the work is finished. It can be produced from bottom-up forecasting or analytical formulas. Different formulas reflect different assumptions.
ETC — Estimate to Complete
ETC is the expected future cost required to complete the remaining work. In a simple relationship: ETC = EAC − AC.
VAC — Variance at Completion
VAC = BAC − EAC. A negative VAC indicates the current forecast exceeds the approved budget; a positive VAC indicates forecast underrun.
Why multiple EAC methods exist
If a past cost variance was a one-time event, future work may be forecast differently from historical CPI. If poor cost efficiency is likely to continue, a performance-based forecast may be reasonable. If both cost and schedule inefficiency are expected to affect remaining cost, another model may be used. Management should document the assumption rather than blindly choosing the most favorable number.
Frequently asked questions
Is EAC fixed once calculated?
No. It should be updated as project knowledge, performance and remaining-work estimates change.
Is VAC the same as profit?
No. VAC compares project cost forecast with the budget baseline, not revenue or profit.
Which EAC formula is best?
There is no single best formula. The correct method depends on why the current variance occurred and how remaining work is expected to perform.
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