BACHELOR OF BUSINESS ADMINISTRATION

BUSINESS ADMINISTRATION

FINANCIAL MANAGEMENT

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
What is the formula for EAC? Estimate at Completion (Also known as Forecast)
A
GOP + ETC = EAC
B
Actuals + ETC = EAC
C
Forecast-Indirect Cost = EAC
D
DOR-WIP = EAC
Explanation: 

Detailed explanation-1: -EAC = BAC / CPI: This is the most recommended calculation when the project is in progress without interference. To check the EAC, divide the BAC by the Cost Performance Index (CPI). EAC = AC + BAC – EV / CPI x SPI: This is the formula used when schedule delays and expenses increase.

Detailed explanation-2: -Estimate at Completion (EAC) is the current expectation of total cost at the end of a project. The EAC represents the final project cost given the costs incurred to date and the expected costs to complete the project. EAC is the expected spend where BAC (budget at completion) is the authorized spend on a project.

Detailed explanation-3: -Estimate at completion (EAC) predicts total costs, while estimate to complete (ETC) predicts the money a project still needs. ETC is the forecast of all additional money required to complete a project. It does not account for money already spent.

Detailed explanation-4: -This results in the standard EVM EAC equation of: EAC equals the ACWPcum plus the result of the BAC-BCWP divided by the selected performance factor. In practice all EVM related EACs are computed with this equation, the only thing that changes is the performance factor.

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