Question
Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is $10,000, and the cumulative earned value is
Calculate the forecasted cost at completion if the total budgeted cost is $15,000, the cumulative actual cost is $10,000, and the cumulative earned value is $12,000. Assume that the work to be performed on the remaining portion of the project or work package will be done at the same rate of efficiency as the work performed so far.
To calculate the forecasted cost at completion (EAC) using the Earned Value Management (EVM) technique, let us use the formula for the EAC based on performance to date:
EAC = BAC / CPI
Where:
- EAC is the forecasted cost at completion.
- BAC is the total budgeted cost.
- CPI is the Cost Performance Index.
The Cost Performance Index (CPI) is calculated as:
CPI = EV / AC
Where:
- EV is the cumulative earned value.
- AC is the cumulative actual cost.
Given the values provided:
- BAC (Total Budgeted Cost) = $15,000
- EV (Cumulative Earned Value) = $12,000
- AC (Cumulative Actual Cost) = $10,000
We need to cal. the CPI:
CPI = EV / AC CPI = $12,000 / $10,000 CPI = 1.2
Now that we have the CPI, we can now calculate the EAC:
EAC = BAC / CPI EAC
= $15,000 / 1.2 EAC
= $12,500
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