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TOPIC: Earned Value Estimates based on Situation - EAC.

Earned Value Estimates based on Situation - EAC. 5 years 8 months ago #2114

  • Tarek Al-Fahham
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I seems to me that there are som differences between the information provided in the Formula Email Course and the Formula Study Guide regarding EAC.

In the email course it mentiones this:

EAC=BAC/CPI
No variances from the BAC have occurred or are expected to continue at the same rate of spending.
This is the formula most often required on the exam.

And also:

EAC = AC+((BAC-EV) / CPI)
Current variances are thought to be typical in the future.

However, on the Formula Guide, I find this:

EAC = BAC / CPI
Assumption: use formula if current
variances are thought to be typical in
the future. This is the formula most
often required on the exam.

and also this:

EAC = AC + ((BAC - EV) / (CPI * SPI))
Assumption: use formula if project is
over budget but still needs to meet a
schedule deadline.

I am a little bit lost. There is no 100% match between both sources.

I just need to know which one to consider. Note that this formula for example:

EAC = AC+((BAC-EV) / CPI)

is provided in the Email Course, but not found in the Formula Study Guide.

Tarek.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 8 months ago #2121

  • Tarek Al-Fahham
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Reference to this link:

www.pmlead.net/images/stories/PDF/pmp__formulas.pdf

I can see differences with reference to which EAC formula to use depending on Project Situation, comparing it to Formula Study Guide.


Appreciate your confirmation.

Tarek.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 8 months ago #2122

  • Jean Reksodiputro
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Hello Tarek,
I think you should only use the below only if it's mentioned "Schedule" at all:
EAC = AC + ( (BAC - EV) / (CPI + SPI) )

Other than that, I think you should these:

*) No variance - Typical (mostly used):

EAC = BAC / CPI
ETC = EAC - AC

*) Previous variance settled - Atypical:

EAC = AC + (BAC - EV)
ETC = BAC - EV


HTH,
Jean R.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 7 months ago #2142

  • Tarek Al-Fahham
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Thanks, Jean.

Tarek.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 7 months ago #2144

  • Tarek Al-Fahham
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I am now watching the PM PrepCast Episode E07.04.02, and I just learned that:

EAC = BAC / CPI = AC + (BAC - EV) / CPI

I was able to prove the above formula. This is really great fun.

Also, it is clearly mentioned that the above fomulas (2 forms) are same and are used if the Original Estimates were worng (there are variances), and the current performance is correct.

I hope my understanding now is correct.

Tarek.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 7 months ago #2227

  • Tarek Al-Fahham
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I am now reviewing the formulas to memorize them:

Noticed that:

EAC = (BAC / CPI) = AC + (BAC - EV) / CPI

Will have to be used if there are actually variances, why ?

Becuase if there are no variances, this means:

AC = EV

and

CPI = 1

and

EAC = BAC

Tarek.
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Re:Earned Value Estimates based on Situation - EAC. 5 years 7 months ago #2228

  • Tarek Al-Fahham
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This means that this formula is also valid:

EAC = BAC / (CPI*SPI)

which is similar to this:

EAC = AC + (BAC - EV) / (CPI*SPI)

Which will factor in both cost performance and schedule requirements.

I don't recal this formula above (first one) was mentioned in the formula guide.

Tarek.
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