You are managing a project with a Budget at Completion (BAC) of $1,200,000. The latest status report shows an Earned Value (EV) of $400,000 and Actual Costs (AC) of $500,000. If you assume the team will continue to perform at the current Cost Performance Index (CPI), what is the best Estimate at Completion (EAC)?
When cost performance is expected to remain unchanged, PMI recommends:
EAC = BAC ÷ CPI
EAC = $1,200,000 ÷ 0.80 = $1,500,000.
Other answers come from common mistakes:
$1,300,000 results from using EAC = AC + (BAC - EV), which assumes future work will return to plan (CPI = 1).
$1,400,000 can appear if someone incorrectly adds EV instead of AC.
$960,000 is obtained by multiplying BAC by CPI (BAC × CPI), which is not a valid EAC formula. The correct forecast is therefore $1,500,000.
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