Earned Value Management – IEAC1 & IEAC2

The power of Earned Value data lies in the forecast data that can be used to challenge and indicate the likely out turn cost of a project on completion.

Two of such indicators are Independent Estimate At Complete 1 and Independent Estimate At Complete 2, more commonly known as IEAC1 and IEAC2.

The IEAC1 formula calculates the IEAC by subtracting the performance to date from the total budgeted value at completion and dividing by the Cost Performance index (CPI). This provides a more optimistic view of the likely out-turn cost than IEAC2.

IEAC1 = Actual Cost of Work Performed + (Budget At Complete – Performance to Data)/Cost Performance Index.

The IEAC2 formula calculates the IEAC by subtracting the performance to date from the total budgeted value at completion and dividing by the Cost Performance index (CPI) multiplied by the Schedule Performance Index (SPI). This provides a more pessimistic view of the likely out-turn cost than IEAC2.

IEAC2 = Actual Cost of Work Performed + (Budget At Complete – Performance to Data)/(Cost Performance Index X Schedule Performance Index).

The IEAC values are typically used to indicate the likely out-turn cost of a project at completion based on performance to date. This can be used to assess and challenge Estimate At Complete values provided by the project teams to help ensure that a realistic out-turn cost is forecasted.

It is important to used IEAC in conjunction with EAC as the IEAC is mathematical outcome and does not take into consideration the potential savings or additional overspends that project team members are aware of.

For further articles on Earned Value Management and other Project Control articles please visit our blog on our website www.myxacom.com where knowledge is no weight to carry.

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