EAC — rebaseline (new ETC)
This version of EAC, the "Estimate at Completion," is the most hands-on of the three. Instead of relying on a mathematical shortcut based on past performance, you build a brand-new, careful estimate of what the remaining work will cost. This is called "rebaselining" — essentially throwing out the old assumptions and starting the forecast fresh.
The formula is EAC = AC + ETC. AC stands for "Actual Cost" — the money you have genuinely spent so far. ETC stands for "Estimate to Complete" — a fresh, detailed prediction of how much more money you will need to finish everything that is left. Adding these two together gives your total expected project cost: money already spent plus money still to be spent.
Reading the result is straightforward — it is simply your all-in projected total. A project manager uses this method when the original plan is no longer realistic: maybe the scope changed, the earlier estimates were badly off, or something unexpected happened. Rather than trusting formulas built on outdated numbers, the team sits down and re-estimates the rest of the work from the ground up (a "bottom-up" estimate), making this the most accurate but also the most effort-intensive approach.
Think of it like renovating a house. Halfway through, you tally up what you've already paid the contractors, then walk through the unfinished rooms and get fresh, room-by-room quotes for the rest. Adding those two numbers together gives you a far more honest picture of the final bill than blindly trusting your original napkin estimate.
Imagine you have already spent $60,000 on your project (that is your Actual Cost, AC). The original budget no longer fits reality, so your team sits down and carefully re-estimates every remaining task, concluding that finishing the work will cost another $50,000 (that is your fresh Estimate to Complete, ETC). You calculate EAC = AC + ETC = $60,000 + $50,000 = $110,000. This tells you the project is now expected to cost $110,000 in total — a figure you trust because the remaining portion was estimated from scratch rather than guessed from past averages.
Every PMP formula explained free — plus worked examples and practice in PMP Math, and full timed mocks in the simulator.