Earned Value Management: AC, BAC, EAC, ETC, EV, and PV

PMBOK v8 Definition

Estimate at Completion (EAC) is the expected total cost of completing all work, expressed as the sum of the actual cost to date and the estimate to complete. Estimate to Complete (ETC) is the expected cost to finish all the remaining project work. Budget at Completion (BAC) is the sum of all budgets established for the work to be performed. Actual Cost (AC) is the realized cost incurred for the work performed on an activity during a specific time period. Earned Value (EV) is the planned value of all the work completed to a point in time, usually the data date, without reference to actual costs. Planned Value (PV) is the planned value of all the work completed (earned) to a point in time.

These six terms form the core of Earned Value Management (EVM), which is part of the Cost Management Knowledge Area within the Planning Process Group (for establishing baselines) and the Monitoring and Controlling Process Group (for performance measurement and forecasting).

Why It Matters for the Exam

The PMI exam frequently tests your ability to distinguish between these six EVM terms and understand their mathematical relationships. Questions appear in two main forms: (1) definition-based questions asking you to identify the correct term for a given description, and (2) calculation-based questions requiring you to compute EAC, ETC, or variance using the correct formula. Mastery of these terms is essential because they form the foundation for all EVM calculations tested on the exam.

Key Points to Remember (for the exam)

BAC (Budget at Completion): The total approved budget for all work. This is the project cost baseline and does not change unless formally re-baselined. It represents "where you planned to be at the end."
PV (Planned Value): The authorized budget assigned to scheduled work. It represents "where you planned to be at this point in time."
EV (Earned Value): The value of work actually completed, expressed in terms of the approved budget. It represents "where you actually are in terms of work completed."
AC (Actual Cost): The total cost actually incurred for the work performed. It represents "how much you spent to get where you are."
EAC (Estimate at Completion): The forecasted total cost of the project at completion. Formula: EAC = AC + ETC. This is a forward-looking projection, not a historical figure.
ETC (Estimate to Complete): The expected cost to finish remaining work. This is the amount needed from now until project completion.
Common Confusion: Many candidates confuse EAC with BAC. BAC is the original budget; EAC is the current forecast based on actual performance. EAC can be higher or lower than BAC depending on project performance.
Key Relationship: EAC = AC + ETC. This is the fundamental relationship tested on the exam. If you know any two of these three values, you can calculate the third.

Typical PMI Exam Example

A project has a BAC of $100,000. At the data date, the project has completed 40% of the work (EV = $40,000), has spent $50,000 (AC), and the team estimates it will cost $70,000 to complete the remaining work (ETC). What is the EAC?

Answer: EAC = AC + ETC = $50,000 + $70,000 = $120,000. The project is now forecasted to cost $20,000 more than the original budget.

PMI Exam Traps

Trap: Confusing EV with AC Reality: EV is the planned value of completed work (budget-based), while AC is the actual cost incurred (spending-based). They are different measures: EV tells you how much work you've done in budget terms; AC tells you how much you spent to do it.
Trap: Thinking EAC equals BAC when performance is on track Reality: EAC equals BAC only when actual costs exactly match planned costs for completed work AND remaining work is expected to be completed at the original budget rate. Any variance in cost or schedule performance changes the EAC.
Trap: Using ETC in place of EAC Reality: ETC is only the remaining work cost; EAC includes both actual costs to date AND the estimate to complete. Always check whether the question asks for total project cost (EAC) or remaining work cost (ETC).
Trap: Assuming BAC changes with project performance Reality: BAC is the original approved budget and does not change unless a formal change request is approved to re-baseline the project. EAC is the forecasted total cost, which can change as project performance evolves.

Important PMI Connections

Related Concept	Relationship Type	Exam Attention Point
Cost Baseline	Source of BAC	BAC is derived from the cost baseline. Questions may ask about the relationship between the cost baseline and the budget at completion.
Variance Analysis	Output of EVM	Cost Variance (CV = EV - AC) and Schedule Variance (SV = EV - PV) are calculated using these terms. Exam questions often combine variance calculations with EAC/ETC forecasts.
Performance Measurement Baseline	Source of PV	PV is derived from the performance measurement baseline. The exam tests that PV represents planned work, not actual work completed.
Forecasting	Application of EAC/ETC	EAC and ETC are forecasting tools. The exam tests that forecasts are updated as project performance data becomes available, typically at the data date.

Quick Review Questions

A project has a BAC of $200,000. At the data date, the EV is $80,000 and the AC is $90,000. The ETC is estimated at $130,000. What is the EAC?
Which EVM term represents "the planned value of all the work completed to a point in time, usually the data date, without reference to actual costs"?
If a project's EAC is $150,000 and the AC is $60,000, what is the ETC?
A project manager needs to know the total expected cost of completing all project work. Which EVM term should they use?
True or False: The Budget at Completion (BAC) changes automatically when actual costs exceed planned costs.

PMBOK v8 Reference

Section 7.4 - Control Costs (for EVM calculations and forecasting) Section 7.2 - Estimate Costs (for cost estimation concepts) Section 7.3 - Determine Budget (for BAC and cost baseline)

Note: The specific definitions of AC, BAC, EAC, ETC, EV, and PV are found in the PMBOK v8 Glossary and throughout the Cost Management Knowledge Area.