How Estimate at Completion Is Calculated
A common approach is to calculate Estimate at Completion as the actual cost incurred to date plus the estimated cost required to complete the remaining work.
EAC = Actual Cost to Date + Estimate to Complete
For example, assume a project has incurred $2.4M in actual costs and the current estimate for remaining work is $1.6M. The calculation is:
EAC = $2.4M + $1.6M = $4.0M
The resulting $4.0M represents the current expected total project cost at completion. Project managers can compare this figure with the approved budget to determine whether the expected final cost is above, below, or aligned with the original plan.
Cost Data Used in the Forecast
Accurate EAC forecasting depends on reliable project cost information. Costpoint can organize financial activity across project structures and accounting dimensions so that actual costs provide a current baseline for forecasting remaining work.
The chart of accounts is important when actual project transactions need to be classified consistently for financial analysis. Labor, materials, subcontract costs, travel, indirect costs, and other applicable expenses can then be evaluated against the categories used in the project budget.
Procurement activity can also influence the forecast. A committed purchase order may represent future project spending that should be considered when estimating remaining costs, particularly when goods or services have been ordered but the associated costs have not yet been fully recorded.
EAC, Budget, and Project Performance
Estimate at Completion becomes more informative when viewed alongside the approved project budget and actual cost-to-date information. The comparison helps project teams understand whether current execution is tracking according to plan and whether forecasts need to be revised.
A project with an EAC below its approved budget may have remaining cost capacity, while an EAC above budget can indicate that projected remaining work requires additional management attention, funding analysis, or corrective planning. The interpretation depends on contract structure, project scope, funding rules, and the assumptions used to prepare the estimate.
For government contractors, maintaining consistent forecasting practices also supports management reporting and provides a structured basis for reviewing expected project financial performance.
EAC and ERP Integration
Estimate at Completion depends on timely information from the ERP environment. When project accounting, budgeting, procurement, labor, and financial reporting data are connected, forecasting teams can work from a more consistent view of project performance.
Organizations using deltek Costpoint can align EAC processes with existing project and financial structures while extending related finance workflows around the ERP. Integration is particularly useful when actual transactions, commitments, budgets, and project forecasts need to be reviewed together.
EAC analysis can also depend on downstream financial information. When customer receipts are being reconciled, cash application matches payments and remittances with outstanding receivables and helps identify unapplied cash or deductions. Although cash application does not directly calculate EAC, accurate receivables information contributes to a broader understanding of project financial position.
Accounting Estimates and Forecast Changes
EAC is a forward-looking estimate, so changes in project assumptions can affect the expected final cost. An Accounting Estimate represents an amount in financial reporting that requires estimation because the exact value cannot be determined with complete certainty at the reporting date. Project cost forecasts may similarly require informed assumptions about remaining labor, materials, subcontracting, schedule, and other requirements.
A significant revision to expected project costs may also require consideration of a Change In Accounting Estimate when the change affects financial reporting estimates under applicable accounting policies. Finance teams should distinguish ordinary project forecast updates from accounting treatment that requires formal financial reporting consideration.
Practical EAC Review Process
- Start with current actual costs recorded against the project.
- Review committed costs and open procurement obligations.
- Update the expected cost of remaining labor, materials, subcontract work, and other activities.
- Compare the resulting EAC with the approved project budget and contract expectations.
- Document material changes in assumptions and investigate significant variances.
- Refresh the forecast as project scope, schedule, costs, or resource requirements change.
Project milestones can also influence forecasting accuracy. Delivery Completion provides a useful business context because completion of deliverables can change the amount of work and cost remaining on a project.
Best Practices for Costpoint Estimate at Completion
Effective EAC management requires a consistent forecasting cadence and clearly documented assumptions. Actual costs should be reconciled before forecasts are updated, and committed expenditures should be reviewed alongside planned remaining work. Finance and project teams should also use consistent project structures so that budget, actual, commitment, and forecast data remain comparable.
Organizations can improve forecast quality by investigating material changes in labor usage, procurement commitments, subcontractor spending, indirect rates, project schedules, and scope. Reviewing EAC against budget at regular intervals gives management a clearer basis for financial decisions and project performance monitoring.
Summary
Costpoint Estimate at Completion provides a forward-looking view of the total cost expected when a project or contract is finished. The core calculation combines actual cost to date with the estimated cost of remaining work. By connecting project accounting, budgets, procurement commitments, ERP data, and documented forecasting assumptions, EAC helps government contractors monitor expected project costs and support informed financial and operational decisions.