Maintaining a Credible Estimate at Completion (EAC)

Originally published March 2023 | Revised May 13, 2026

The Defense Contract Management Agency (DCMA) as well as other government entities responsible for Earned Value Management System (EVMS) compliance and surveillance continue to identify issues with the quality of contractor estimates at completion (EAC). Using DCMA statistics, EIA-748-D Guideline 27, Maintain Estimates at Completion, is one of three guidelines¹ that represent a third of all EVMS Corrective Action Requests (CARs).

Why Credible EACs Matter 

A credible EAC is essential to all stakeholders and a foundation for managing projects successfully. Executive management and project managers must have a complete and accurate understanding of the projected contract or project EAC to ensure financial data is not misrepresented (Sarbanes-Oxley). The customer must have confidence in a contractor’s forecast completion date (FCD) and EAC data to understand whether the remaining work can be completed within the contractual period of performance and target cost, or, if not, how long it will take and how much it will cost.

When the most likely EAC exceeds the negotiated contract cost, the contractor’s profit margins may be at risk. Should the most likely EAC exceed the customer’s funding limit, they will need to secure additional funding, modify the work scope, or slow the pace of the project. No one likes schedule or cost surprises.

What determines whether an EAC is credible? 

A credible EAC reflects the cumulative to date actual costs of work performed (ACWP) (costs the contractor has already incurred) plus the current ETC. The ETC must provide a realistic estimate of the time and resources required to complete the remaining authorized work using projected rates. It represents the time phased estimate of spending which translates to the future funds required.

EACs should be based on actual costs and performance to date, the nature and amount of remaining scope, assumptions about and projections of future performance for that scope, risks and opportunities, economic escalation, expected direct and indirect rates, subcontract, and material commitments. As illustrated in Figure 1, project managers should routinely evaluate their project’s ACWP, ETC, and range of EACs along with the funding profile to verify amounts expended and forecasted are within the parameters of available contract funds.

What project control practices help to ensure EACs are realistic?

Three recommended best practices include:

1. Actively maintaining the detail ETC data every reporting cycle. This starts with updating the current schedule to include all authorized remaining scope along with the resource loaded activities to reflect performance to date and the latest planning (timing and resource requirements) for work in progress and future work effort. This is the basis for updating the time phased cost estimate for in progress work packages that is added to the cumulative to date actual costs as well as the cost estimate for future work/planning packages. Subcontract forecasted schedules and cost must be included. The current schedule forecast dates and time phased cost estimate must be aligned. Actively maintaining the detail data ensures the current schedule and ETC data reflect the project’s current state. The control account managers (CAMs) can substantiate their ETC with relevant data for analysis and take action to address a significant variance at completion (VAC).
2. Actively monitoring project FCDs and EACs. Project managers that routinely maintain a range of data driven FCDs and EACs (best case, most likely, and worst case) are better prepared to verify the control account FCDs and EACs are realistic, realized risks have been handled, and emerging risks have been identified, assessed, and addressed. Experienced practitioners use various metrics such as comparing the Cost Performance Index (CPI) to the To Complete Performance Index (TCPI) to test the realism of the EAC. They also include a realism check of the baseline and current integrated master schedule (IMS) to identify any potential disconnects with the cost-based indices discussed in a previous blog, Incorporating IMS Information Directly into IEAC Formulas. Managers should scrub the detail ETCs to assess the quality of the estimates and verify the content of the backup data. A good understanding of the detail ETCs is necessary to produce credible project level EACs with crisp rationale and narratives provided to executive management and the customer. 
3. Maintaining open communications with all levels of management, subcontractors, and the customer. The project manager is the main conduit to manage impacts to their project’s FCD and EAC such as when finance changes direct or indirect rates, there are changes in resource availability or a spike in material prices, or the customer modifies the work scope or funding. As a result, project personnel can quickly handle issues or project changes. Direct and open communications with executive management ensures there is a clear understanding of their project’s FCD and EAC.

What are some things to avoid?

H&A consultants often observe practices that negate the value of maintaining the ETC/EAC and can result in an EVMS corrective action request (CAR). The root cause often points to ad-hoc processes or corporate culture. Examples:

1. Management provides a target FCD and EAC number the CAMs must match. The ETC/EAC should be “the voice of the CAM”. The CAM is saying “if you give me these resources as scheduled, I can finish the job this way.” Any approach that does not respect the voice of the CAM can cause the ETC/EAC to be unrealistic or at least unsubstantiated. Giving the CAM “the date and number” increases the likelihood the FCD and ETC are unrealistic. There may be a valid reason for this directive as a management what-if exercise or to gain a deeper understanding of the situation. When done as a routine management strategy, it diminishes the value of the ETC data to manage the project’s remaining work and prevent cost overruns. The CAMs should be in a position where they can substantiate their schedule timeline, resource requirements, and cost estimate to complete the remaining work. Project managers should be in a position where they can verify the detail ETC/EAC data to establish a level of confidence in their project level EACs they provide to executive management and the customer.
2. Project personnel take the path of least resistance. This is often an indication of a lack of direction or an established process. They either do not create the ETC data or maintain it on a routine basis. In some instances, the CAMs manage their ETC data to avoid oversight. An old but valid saying is “the tall grass gets mowed” – the CAM purposely doesn’t raise their ETC to a value that would attract attention. Another troublesome approach is to set a cost management tool option to a static EAC; the CAM may manually update the EAC number quarterly at best. The result? The FCD and ETC data isn’t current; there is zero insight into potential emerging issues. DCMA or the customer can easily identify this when they analyze the time-phased ETC data in the Integrated Program Management Data and Analysis Report (IPMDAR) Contract Performance Dataset (CPD) submittal.
3. Schedule and cost are created/maintained separately. This often occurs when the schedule and cost tools are not kept in sync for the project’s duration. Significant effort may go into ensuring the data are in alignment to establish the performance measurement baseline (PMB). The IMS resource loaded activities are used as the basis for the time phased budget baseline in the cost tool. However, the ETC data in the current schedule may not exist or be actively maintained. Project personnel only maintain the ETC data in the cost tool and fail to verify it aligns with the current schedule activity forecast dates and resource requirements. It is not part of their routine status and analysis process every month.

Taking Action to Review and Enhance Current Processes

A simple step to start with is to use the IMS Current Execution Index (CEI). This is a useful measure of how well a team can forecast just a single month into the future. If a team cannot achieve a high accomplishment rate against just a one-month forecast, any longer-term ETC is questionable. Start simple and focus on improving the one-month accuracy then move on to longer periods. Build confidence in the team’s ability to see and manage the future.

Another basic step. Build time into the process for managers to scrub ETCs. Maybe it is not possible to scrub every control account ETC every reporting period, but a rotational approach where ETCs are scrubbed as often as possible will improve the ETC and improve the understanding of the ETCs.

Innovate. AI tools are rapidly becoming capable of assuming skilled roles such as project analysts and can yield valuable insight. Tools are already available that can evaluate variances and variance analysis reports (VARs). Poor quality analysis translates to poor quality ETCs. Take action that supports improved analysis.

At a higher level, with the publication of the EIA-748-E Standard for EVMS revised 27 guidelines along with the evolving regulatory environment discussed in a previous blog, Revitalizing Earned Value Management Systems, this is a perfect time to review current EVMS ETC/EAC processes. The EIA-748-E split the EIA-748-D Guideline 27 into two parts: EIA -748-E Guideline 20 focuses on the control account level EACs and Guideline 23 focuses on the project level EACs. The DoD EVMS Interpretation Guide (EVMSIG) for Revision E has been updated accordingly.

We recommend reviewing approved EVM System Descriptions to ensure existing content supports the EIA-748-E Guideline revised text as well as remapping content to the EIA-748-E Guidelines and applicable government guides such as the DoD’s updated EVMSIG. Take the time to determine whether the documented processes make sense. If project personnel are ignoring the current process, it may be an indication it needs a revisit; it may need to be simplified or redone.

Consider reviewing the schedule data quality assessment process. Are project schedules providing an accurate forecast of the time required to complete the remaining work effort? This includes assessing whether task duration estimates are realistic as discussed in another blog, Improving IMS Task Duration Estimates. The IMS is the first line of defense to identify the potential that a cost overrun issue is likely to occur.

Lastly, open communication is essential to ensure technical, schedule, or cost realized risks are visible to all stakeholders. What is certain in any project plan is that things will not go as planned. Success depends upon quickly identifying the root cause of an issue and correcting course to reduce or eliminate the impact. 

Reminder of the Objective of the ETC/EAC

The ETC is the detailed step-by-step plan the CAM provides to show how the remaining work will be accomplished. The goal of maintaining a credible ETC and EAC is to verify an executable plan is being regularly updated to accomplish the remaining scope of work within the contract’s schedule, cost, and funding targets for internal management visibility and control. The customer must also have confidence in the contractor’s ability to deliver and meet the remaining contract objectives.

The best way to prevent an ETC/EAC process CAR is to ensure you have a useful established process personnel follow, and they know how to use the schedule and cost tools to consistently maintain quality schedule as well ETC and EAC data. H&A scheduling and earned value consultants have worked with numerous clients to design or enhance their ETC/EAC process. H&A also offers EVMS training workshops that include content on how to develop a realistic EAC. Regular EVMS training always helps to reinforce best practices. Call us today at (714) 685-1730 to get started.