Estimate at Completion – Bottom-Up Method – 5th Edition PMBOK

Posted on August 21, 2009 by

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Budget

Budget

The Budget at Completion (BAC) is how much the project is supposed to cost when finished. However, during the project it may become clear that the project will not end up costing what it is supposed to cost. The Estimate at Completion (EAC) replaces the BAC for the amount that the project is now believed to cost when it is completed. Calculating EACs are part of the tool and technique of forecasting outlined in the fourth edition PMBOK®’s Control Costs process.

There are many ways to calculate EAC. The bottom-up method of calculating the EAC is a simple concept. This simply adds the Actual Cost (AC), which is how much money was actually spent at this point, to the bottom-up ETC. The bottom-up ETC is the sum of how much all the remaining estimated costs will be. This may be provided by different people working on the project.

For example, Carl and his siblings are working on restoring a car. The BAC is $500, but now it’s obvious that this project will cost more than $500. So far they have spent $450. Carl’s older brother says they will need $1000 more for some engine work, Carl’s younger brother needs $200 more for some interior work, and Carl’s sister says she will need $400 more for the paint job. To calculate the EAC, add the AC to the bottom –up ETC. So, EAC = AC + bottom-up ETC. = $450 + ($1000 + $200 + $400) = $2050.