EAC — atypical variance
EAC stands for "Estimate at Completion." It is your best new guess of what the whole project will cost by the time it is finished, based on what you have learned so far. Think of it as updating your budget forecast partway through the work.
This particular version of the formula is used when the cost problem (or bonus) you have run into is a one-time event that will not happen again. In project language we call this an "atypical" variance — "variance" just means the difference between what you planned and what actually happened, and "atypical" means it is a one-off, not a pattern.
To calculate it in words: take AC, the "Actual Cost" (the real money you have already spent), and add to it the value of the work still left to do. The work left to do is BAC minus EV. BAC is the "Budget at Completion" — the original total budget for the whole project. EV is "Earned Value" — the budgeted worth of the work you have actually completed so far. Because you expect the rest of the work to go exactly as planned, you add its planned cost straight on top of what you have already spent.
How to read the result: a higher EAC than your original BAC means you now expect the project to cost more than first budgeted; a lower EAC means you expect to come in under budget. A project manager uses this formula when, for example, a surprise one-time expense happened but everything else looks completely normal going forward.
Think of it like a road trip where you paid an unexpected $50 towing fee early on. That tow was a one-time mishap, so for the rest of the drive you just budget the normal fuel costs on top of what you have already spent — you don't assume you'll get towed again and again.
Imagine your project's total budget (BAC) is $100,000. So far you have spent $60,000 in actual cost (AC), and the budgeted value of the work you have completed (EV) is $50,000. That means you overspent, but let's say the overspend came from a single storm that damaged materials — a one-off event. The remaining work is BAC minus EV = $100,000 − $50,000 = $50,000. Since the rest will run to plan, you simply add that to what you have already spent: EAC = $60,000 + $50,000 = $110,000. The result tells you that even though you had a bad start, you now expect the finished project to cost about $110,000 — $10,000 over the original budget — with no further surprises expected.
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