What an EAC Review Examines
An effective review goes beyond checking whether the EAC number changed from the prior reporting period. Reviewers examine the underlying assumptions and supporting financial data to understand why the forecast moved and whether the remaining-cost estimate reflects the current project position.
- Actual costs: Review posted labor, material, subcontract, travel, and indirect costs through the current period.
- Remaining work: Validate the labor hours, materials, subcontract requirements, and other spending needed to complete the remaining scope.
- Commitments: Compare open commitments and approved spending with amounts included in the forecast.
- Variances: Investigate significant differences between budget, actual performance, and the latest EAC.
- Project assumptions: Review scope changes, staffing requirements, schedule changes, indirect rates, and other assumptions affecting the forecast.
EAC Review Process
The review normally begins with a current-period financial data pull. Finance teams reconcile actual project costs with the general ledger, while project managers assess progress against the remaining scope. The team then evaluates whether the estimate to complete still reflects current conditions.
For example, assume a project has incurred $2.8M and the previous estimate for remaining costs was $1.2M. During the review, updated labor requirements and subcontract commitments increase the expected remaining cost to $1.5M. The revised EAC becomes:
EAC = $2.8M + $1.5M = $4.3M
If the prior EAC was $4.0M, the review identifies a $300,000 increase that should be explained, documented, and incorporated into project reporting where appropriate.
Accounting and Coding Checks
EAC reliability depends on the accuracy of the accounting data supporting the forecast. Reviewers should verify that project transactions are posted to the correct accounts, periods, projects, and cost categories. A chart of accounts provides the accounting structure used to classify financial activity and helps reviewers trace project costs into financial reporting.
A Coding Review can provide an additional check that transactions have been assigned to appropriate project, account, cost element, or organizational codes. This is particularly useful when a forecast movement appears to originate from an unusual cost category or unexpected accounting allocation.
The review should also consider tax-related amounts when they form part of project costs. Proper sales tax validation can help identify jurisdiction, exemption, nexus, or rate issues that could otherwise affect the accuracy of recorded and forecasted costs.
EAC Review and Procurement Commitments
Procurement commitments can materially influence the estimate of remaining project costs. Reviewers should compare requisitions, approved purchases, subcontract commitments, and open purchase orders with the amounts included in the EAC.
A purchase order provides evidence of an approved procurement commitment and can help finance teams distinguish amounts already committed from future costs that remain estimates. This distinction improves visibility into how much of the remaining forecast is supported by known commitments.
Where vendor activity contributes significantly to project spending, reviewers can also examine transaction histories and approval records. Audit Trails can preserve the steps taken during vendor-management activities, including actions performed by people or AI, supporting transparency when financial teams investigate changes affecting project forecasts.
Management Review and Financial Decisions
EAC review is also a management process. Finance and project leaders use the results to determine whether a forecast change requires corrective action, additional monitoring, revised resource assumptions, or updated financial reporting. The goal is to make the forecast reflect the best available information rather than simply preserve the previous estimate.
A P L Review can complement EAC analysis by examining how projected project revenue and costs affect expected profit and loss results. This helps management connect project-level forecasting with broader financial performance.
A Contract Review may also be appropriate when changes in scope, funding, deliverables, billing terms, or contractual obligations contribute to an EAC movement. Reviewing these factors together helps distinguish operational cost changes from changes driven by contract conditions.
Best Practices for EAC Reviews
Organizations can make EAC reviews more consistent by establishing a defined reporting cadence and assigning clear responsibilities between project management, accounting, finance, and program controls. Each review should document material forecast changes and the assumptions supporting them.
- Use current actual costs and commitments as the starting point.
- Separate committed costs from uncommitted estimates.
- Document material changes in labor, subcontract, material, and indirect-cost assumptions.
- Compare the current EAC with prior forecasts and the approved baseline.
- Investigate recurring unfavorable variances rather than simply adjusting the forecast total.
- Retain supporting calculations and review evidence for management reporting and audit purposes.
Summary
EAC Review is a disciplined examination of a project's latest estimated total cost, combining accounting validation with operational assessment. By reviewing actual costs, commitments, remaining work, coding, procurement activity, contractual conditions, and projected profitability, organizations can maintain more reliable forecasts and make better-informed financial decisions throughout the project lifecycle.