EAC — typical (CPI × SPI)
EAC again means "Estimate at Completion" — your refreshed forecast of the project's total final cost. This version of the formula is the most cautious one, used when the problems you have seen so far are "typical," meaning they reflect a pattern that is likely to keep affecting the rest of the work — and both your spending performance and your schedule performance matter.
To understand it, you need two efficiency scores. CPI is the "Cost Performance Index," which tells you how much value you are getting for each dollar spent (calculated as Earned Value divided by Actual Cost). SPI is the "Schedule Performance Index," which tells you how fast you are progressing compared to plan (Earned Value divided by Planned Value). For both, a value of 1.0 means right on target, above 1.0 is better than planned, and below 1.0 is worse than planned.
In words, the formula takes the remaining work (BAC minus EV — the total budget minus the value of work done) and divides it by CPI multiplied by SPI. Dividing by these performance numbers stretches the remaining cost estimate when you have been running inefficiently: if you are both over budget and behind schedule, the multiplied factor is small, so dividing by it makes the forecast bigger. Then you add your Actual Cost already spent.
How to read it: this usually produces the largest, most pessimistic EAC of all the methods. A project manager reaches for it when performance has been genuinely poor on both cost and time, and there is no reason to believe the remaining work will magically go better.
Think of it like predicting the cost of the rest of a marathon when you have been running slowly AND wasting energy. Because both your speed and your efficiency are below par, you don't just add the normal remaining cost — you inflate it, assuming those same struggles will drag on the whole way to the finish line.
Suppose BAC (total budget) is $100,000. You have spent an actual cost (AC) of $60,000, and earned value (EV) of $50,000. Your CPI is EV ÷ AC = $50,000 ÷ $60,000 = 0.83 (getting 83 cents of value per dollar). Suppose your SPI is 0.90 (progressing at 90% of the planned pace). Remaining work is BAC − EV = $100,000 − $50,000 = $50,000. Multiply the two indexes: CPI × SPI = 0.83 × 0.90 = 0.75. Now divide: $50,000 ÷ 0.75 = about $66,700. Finally add the money already spent: EAC = $60,000 + $66,700 = $126,700. The result warns you that if both your cost and schedule troubles continue, the project could finish around $126,700 — well over the original $100,000 budget.
Every PMP formula explained free — plus worked examples and practice in PMP Math, and full timed mocks in the simulator.