As estimate to completion (ETC). Compare this EAC information

Asindicated in the figure above, there are two scenarios for using TCPI, eachscenario requiring a slight deviation in the calculation.Thefirst scenario employs a TCPI based on the authorized budget, i.

e. Budget atCompletion. This is used to determine the required performance based on whathas been authorized in the form of an official budget.

Once it becomes obviousthat the budget (or performance) is no longer achievable, the projectmanagement team needs to determine how much money it will cost to complete work (calledthe EACc). It is not uncommon for projects, when making a new EAC forecast, toassume that everything will suddenly go right, and that all project risks arebehind them. Thus, an initial EACc may be unrealistic or unachievable.

Piecemeal EACs are often the norm, where the EACc projection goes up each monthas actual performance is known.Consideringthe above, the second scenario in using TCPI is to determine, and verify therequired future EACc. If the resulting TCPI based on the new EACc is higher ormuch lower than the existing performance (CPI), it would be reasonable toassume that the new EACc might not be accurate.

Usingthe previous example, would an EACc requiring a future TCPI of 1.25 or 1.10 beachievable? Probably not. More likely, a TCPI of 1.0 or 0.9 would be reasonable.The newEACc is assumed to be correct if the indexes are the same for both scenarios.

 2.7.4       ForecastsForecastinginvolves the calculation of a project’s Estimate at Completion (EAC) values.The EAC values should represent the total project considering performance(actual) to date, plus future estimate to completion (ETC).Compare thisEAC information with the performance measurement baseline to identify thecurrent variances from the plan, important to management and any applicablecustomer reporting requirements.The EAC Calculationsconsist of the following forecasts to consider:·        Estimateat Completion (EAC) – Bottom up.·        IndependentEstimate at Completion for Cost (IEACc). 2.

7.4.1       Estimate at Completion – Bottom UpEstimate atCompletion using the bottom up approach (also referred to as a formal EAC),should be based on the following:·        The fullperiod of the project.·        Representsa complete review of the plan to complete the project.·        Consistsof the actual costs to date plus the Estimate to Complete (ETC).

·        Performedat the work package and planning package level of the control account.·        Includes areview of the remaining scope of work and the schedule for completing theremaining scope of work.·        Includesall approved change control since the last EAC and considers selected identifiedearly warning issues.·        Includes acomplete re-evaluation of project risks, including technical, schedule, andcost contingency. 2.

7.4.2      IndependentEstimate at Completion for CostAnIndependent Estimate at Completion for Cost provides a statistical final costindication. It should only be considered as a “Reasonableness Test” and doesnot replace the Bottom up EAC.To calculateIndependent Estimate at Completion (IEAC) the following three variables arerequired:·        Total ofactual costs to date.

·        Cost valueof work remaining for uncompleted tasks (BAC – EV).·        Divisionof the remaining work by some performance efficiency factor, which is used toproduce a range of EACs. The followingshould be considered when using IEAC calculations:·        IEAC shouldnot be your final EAC.

·        IEAC canbe used for comparative analysis.·        IEAC teststhinking only.