Dears,
Currently, I review some exercises, and I found 2 different ways for calculation of EAC/ CPI or ETC, when you have a list of activities as part of a whole package or project.
Sometimes, the calculations are made for each activity, sometimes, it is made globally. And the results are not the same...
Example:
Using the situation below, and assuming continued efficiency for work in progress and fixed price contract for task 4, calculate the EAC:

Alexandra, your PV should be the same as your budgeted cost.

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1 reply by Alexandra Cossard

Dec 23, 2016 9:08 AM

Alexandra Cossard

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This is how the exercise is written....I could share a picture of it, it would be easier...but it doesn't seem possible to publish documents on the forum

Alexandra, your PV should be the same as your budgeted cost.

This is how the exercise is written....I could share a picture of it, it would be easier...but it doesn't seem possible to publish documents on the forum Saving Changes...

Please do share the full solution whenever you can but for now, can you just confirm if the answer given was around $26,000 ?

You are right....but not me :(

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1 reply by Rami Kaibni

Dec 23, 2016 9:47 AM

Rami Kaibni

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Alexandra,

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000 Task 2: CPI = 1 & EAC = $4,000 Task 3: CPI = 0.5 & EAC = $12,000 Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Please note that there are multiple ways to calculate EAC. Each way presumes on certain conditions.

EAC = AC + ETC = 24,000 (when deviation is expected to be corrected)
EAC = BAC/CPI = 28,500 (when CPI and SPI are expected to remain close to 1)
EAC = AC + (BAC-EV)/(CPI*SPI)) = 40,650 (when project extend to continue its trend) Saving Changes...

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000 Task 2: CPI = 1 & EAC = $4,000 Task 3: CPI = 0.5 & EAC = $12,000 Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Total EAC = $26,000

Does this make sense ?

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1 reply by Alexandra Cossard

Dec 23, 2016 9:58 AM

Alexandra Cossard

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You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !

Calculate the CPI = EV/AC for each task and then calculate the EAC=Budgeted Cost/CPI because the situation mentioned that it will be the same working efficiency:

Task 1: CPI = 0.833 & EAC = $6,000 Task 2: CPI = 1 & EAC = $4,000 Task 3: CPI = 0.5 & EAC = $12,000 Tasl 4: EAC = $4,000 (It is a fixed price contract as mentioned so you are going to spend this amount only at the end of the task if there were no scope changes)

Total EAC = $26,000

Does this make sense ?

You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !

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2 replies by Rami Kaibni and Stéphane Parent

Dec 23, 2016 10:10 AM

Rami Kaibni

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You're Welcome Alexandra.

In both cases, the final answer should be the same so it doesn't matter which way to adopt especially that the question asked for the final EAC for the whole project.

What I usually do (Depending on what the questions asks for), I usually take each task alone and do the math then to check my answer, I calculate the same considering all tasks so if both answers are the same then my answer us most probably correct.

You always need to analyize what the question asks for in order to know which way to go.

You're completely right Rami.
But I wonder how you know that you have to consider each task whether than the all project?
My proposal was, considering all the tasks:
- Total of EV = 14k
- Total of AC= 19k
-CPI for the 4 tasks: 0,7368
-BAC: 19k
-So EAC= 19/0,7368 = 25787, so approximately 26k.

But,what is the right way? In some other exercises, I have seen the way I describe here, ans seeing now, that EAC is calculated for each task, I don't know what is the best?
Thanks for your support !

You're Welcome Alexandra.

In both cases, the final answer should be the same so it doesn't matter which way to adopt especially that the question asked for the final EAC for the whole project.

What I usually do (Depending on what the questions asks for), I usually take each task alone and do the math then to check my answer, I calculate the same considering all tasks so if both answers are the same then my answer us most probably correct.

You always need to analyize what the question asks for in order to know which way to go.

Hope this helps.

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1 reply by Alexandra Cossard

Dec 23, 2016 10:14 AM

Alexandra Cossard

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But, in that case, considering what the question ask, you would prefer do it per activity?
Thanks a lot...And best wishes for 2017