How do you calculate BAC and EAC for complex projects?

My recommendation is to employ a comprehensive approach when calculating BAC and EAC for complex projects. In the initial stages, ensure a meticulous determination of BAC, considering all facets of the project, such as scope, schedule, and resources. When going into EAC calculations, my suggestion is to explore multiple methods, including the bottom-up, earned value, and forecast methods. This multifaceted approach allows for a more nuanced understanding of potential cost variations and better decision-making. In conclusion, adopting a diverse set of EAC calculation methods ensures a more accurate projection of the project's financial trajectory, empowering project managers to make informed decisions.

Budget at Completion (BAC): BAC represents the total budgeted cost for the entire project. It is usually established at the beginning of the project during the planning phase. BAC is the sum of all the planned costs for the project, including direct and indirect costs. � � � = Planned Value (PV) BAC=Planned Value (PV) In EVM, Planned Value (PV) is the authorized budget assigned to the work scheduled to be completed up to a certain point in time.

I recommend doing a top down and a bottom up BAC. Top down is high level using knowledge of past projects to estimate effort and costs. This is usually optimistic. Bottom up is task by task estimation of cost and effort. This usually over estimates the total cost. The real answer is somewhere in between.

BAC is the authorized budget for the project, which doesn't include any equity value impact due to potential profit or loss share because of project performance.

Estimate at Completion (EAC): EAC is an estimate of the total cost of completing the project based on performance and progress to date. Three common methods are: EAC = BAC / CPI: Assumes the current cost performance continue throughout the project. CPI (Cost Performance Index) is ratio of earned value to actual cost. EAC = AC + (BAC - EV): Assumes that future costs will be at the budgeted rate. AC (Actual Cost) is total actual cost incurred. EAC = AC + (BAC - EV) / CPI: A combination of first two methods, incorporating both past performance and the budgeted rate. = AC + [(BAC - EV) / CPI] EAC=AC + [(BAC - EV) / CPI] AC is the Actual Cost, BAC is Budget at Completion, EV is the Earned Value, and CPI is Cost Performance Index.

in my experience, during bidding project, the estimate at completion sometimes not follow the earned value since there is changes during delivery, that we have to periodically check the comparison between the estimate and real earned

Mostly Subject Matter Expert, refers to the industrial Norm for EAC calculation, despite market fluctuation heavily contributing while estimation and leading to futuristic EAC.

When selecting the optimal method for calculating EAC, project managers should weigh various factors. Assess the accuracy and reliability of initial estimates and assumptions, considering any deviations from the plan. Contemplate the complexity and uncertainty inherent in the project scope and schedule. Evaluate the availability and quality of data, and tailor the choice to the purpose and audience of the EAC report. Communicate assumptions and limitations clearly to stakeholders. Through a judicious blend of judgment and experience, project managers can align the chosen method with the unique dynamics of their projects, ensuring a robust and contextually relevant EAC calculation.

While traditional formulae may offer a semblance of precision, in complex projects, adaptability beats rigidity. Embrace real-time data, qualitative insights, and the dynamism of your team for a more accurate BAC and EAC assessment. Complexity demands flexibility, not just formulae.

There are loads of great suggestions in this article, but I would say that there is no "best" method for EAC. If you have the data and the bandwidth, use multiple methods. Automate as much of this as possible, especially the data collection, so your project controls team spend them time doing valuable analysis and now on busy work inputting data and filling out spreadsheets.