A project has a Budget at Completion (BAC) of $800,000. The cumulative Cost Performance Index (CPI) is 0.90, and you believe this cost performance trend will continue for the remainder of the work. Using the earned value formula EAC = BAC / CPI, what is the project's Estimate at Completion (EAC)?
When future cost performance is expected to remain the same, the Estimate at Completion (EAC) is calculated by dividing the Budget at Completion (BAC) by the cumulative Cost Performance Index (CPI):
Because the CPI is less than 1.0, cost efficiency is below plan, so the projected final cost is higher than the original budget. The other options are incorrect because:
$720,000 would require a CPI greater than 1.1 (indicating under-budget performance).
$800,000 assumes CPI exactly equal to 1.0 (on budget).
$1,005,000 would correspond to a CPI of about 0.80, which is worse than the current performance trend.
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