A project manager is reviewing the current project status and needs to forecast the total cost at completion. The project has a Budget at Completion (BAC) of $500,000, current Actual Cost (AC) of $200,000, and an Earned Value (EV) of $180,000. Assuming the current cost performance trend will continue, what is the Estimate at Completion (EAC)?
The correct answer is $555,556. To calculate the Estimate at Completion (EAC) when assuming the current cost performance trend will continue, we use the formula: EAC = BAC / CPI. First, we need to calculate the Cost Performance Index (CPI): CPI = EV / AC = $180,000 / $200,000 = 0.9. Then, we can apply the EAC formula: EAC = BAC / CPI = $500,000 / 0.9 = $555,556. This method takes into account the current cost performance and projects it to the end of the project, providing a more accurate forecast than simply adding the remaining budget to the actual cost.
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