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Unformatted text preview: gram analyst to estimate the EAC at any point in the
project life cycle. (See sidebar on computing EAC.)
If the cost and schedule baselines and the
technical scope of the work are not fully integrated, then
cost and schedule variances can still be calculated, but • A receivable was late or was unsatisfactory for
A task is technically very difficult and requires
more resources than originally planned
Unforeseeable (and unlikely to repeat) events
occurred, such as illness, fire, or other calamity. Computing the Estimate at Completion
EAC can be estimated at any point in the
project. The appropriate formula depends upon the
reasons associated for any variances that may exist.
If a variance exists due to a one-time event, such as
an accident, then EAC = BUDGET + ACWP BCWP where BUDGET is original planned cost at
completion. If a variance exists for systemic
reasons, such as a general underestimate of
schedule durations, or a steady redefinition of
requirements, then the variance is assumed to
continue to grow over time, and the equation is:
EAC = BUDGET x (ACWP / BCWP).
If there is a growing number of liens, action
items, or significant problems that will increase the
difficulty of future work, the EAC might grow at a
greater rate than estimated by the above equation.
Such factors could be addressed using risk
management methods described in Section 4.6.
In a large project, a good EAC is the result of
a variance analysis that may use of a combination
of these estimation methods on different parts of the
WBS. A rote formula should not be used as a
substitute for understanding the underlying causes
of variances. NASA Systems Engineering Handbook
Management Issues in Systems Engineering
Although the identification of variances is
largely a program control function, there is an important
systems engineering role in their control. That role
arises because the correct assessment of why a
negative variance is occurring greatly increases the
chances of successful control a...
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