Project Management Institute

The estimate at completion problem

a review of three studies

In order to explore Estimate at Completion (EAC) formulas and examine their accuracy, three unpublished studies that had been sponsored by the United States Army, Air Force and Navy in the 1980s were reviewed. The author highlights the 1991cancellation of the Navy's A-12 Avenger program as an example of the utilization of cost analysis and EAC formulas. EAC formulas are based on several data elements: Actual Cost of Work Performed (ACWP), the Budgeted Cost of Work Scheduled (BCWS), and the Budgeted cost of Work Performed (BCWP). Two main generalizations result from the reviews, along with the suggestion that underlying cultural bias may skew cost estimates. The accuracy of regression-based models over index-based has not been established, and the accuracy of index-based formulas depends on the type of system, and the stage and phase of the contract.
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