Definition:
The total expected cost of a project at completion, based on current performance trends.
EAC=AC+ETC
Key Components:
- Actual Costs (AC): Expenses incurred to date.
- Estimate to Complete (ETC): Forecasted remaining costs.
- Performance-Based Adjustments: Accounts for cost overruns or efficiencies.
Use Cases/Industries:
- Construction: Predicting final costs for high-rise buildings.
- Energy Sector: Estimating total expenditures for power plant projects.
- IT Projects: Calculating total costs for software development.
Advantages:
- Helps stakeholders plan for financial contingencies.
- Allows proactive cost control adjustments.
- Supports financial risk assessment.
Challenges:
- Can fluctuate based on changing project conditions.
- Requires accurate tracking to avoid misleading estimates.
Related Terms:
Estimate to Complete, Cost Performance Index, Earned Value
Example:
A $10M project with $6M spent and an ETC of $5M has an EAC of $11M, indicating a projected overrun.
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Synonyms:
Final Cost Estimate, Total Projected Expenditure, Forecasted Total Budget
