EAC Calculation and Required Inputs
A commonly used EAC formula is:
EAC = Actual Cost to Date + Estimate to Complete
For example, assume a project has incurred $2.4M in actual costs and the latest estimate shows another $1.6M is required to finish the remaining work. The updated EAC is:
$2.4M + $1.6M = $4.0M
The calculation is straightforward, but the quality of the result depends on the assumptions supporting the remaining-cost estimate. Project teams should review labor, materials, subcontractors, travel, overhead, schedule changes, and committed costs when determining the current estimate to complete.
Review Actual Costs Before Updating EAC
Begin by reviewing actual project costs recorded through Costpoint. Confirm that labor, material, subcontractor, travel, and other relevant transactions have been captured and assigned to the correct project and accounting dimensions.
The chart of accounts provides an important coding structure when reviewing financial transactions. Accurate coding helps ensure that costs feeding project reporting are classified correctly. Invoice capture, validation, matching, approval, and posting should therefore be reviewed when material supplier costs could affect the EAC.
invoice processing is particularly relevant when supplier invoices represent significant project costs. Ensuring that invoices are captured, validated, matched, coded, approved, and posted helps project teams work from current financial information when revising their forecasts.
Update the Estimate to Complete
After reviewing actual costs, determine whether the remaining-cost estimate still reflects current project conditions. Review unfinished deliverables, labor requirements, procurement commitments, subcontractor obligations, schedule changes, and approved scope adjustments.
An EAC update should distinguish between costs already incurred and costs that are still expected. If a major subcontractor commitment has increased, for example, the remaining estimate should incorporate the updated expected expenditure rather than relying on the original assumption.
Project teams should document the primary drivers behind material changes. This creates a useful explanation when management compares the new EAC with the previous forecast, contract value, budget, or funding position.
Account for ERP and Tax Data Changes
Costpoint EAC updates depend on reliable ERP data, so the process should remain aligned with the organization's deltek configuration and project accounting structure. Changes to project, accounting, procurement, or financial data can affect the information used to develop the remaining-cost estimate.
Tax treatment should also be reviewed when applicable. For example, use tax validation can affect the expected cost of taxable purchases when jurisdiction rules, exemptions, or transaction classifications change. Reviewing applicable tax treatment helps ensure that the forecast reflects the expected financial impact of project-related purchases.
Review and Approve the Updated EAC
Once the revised EAC has been prepared, compare it with the previous estimate and identify the reasons for significant changes. Useful review areas include actual cost growth, remaining labor requirements, procurement commitments, schedule movement, scope changes, and revised indirect cost assumptions.
Related financial updates should be distinguished from an EAC revision. A Quotation Update may change an expected commercial amount, while a Registration Update can maintain current administrative information. Neither automatically represents a revised project EAC unless the underlying change affects expected project cost.
Similarly, an Expense Policy Update may change how certain expenses are governed or reimbursed, but the EAC should only be adjusted when the policy change has a measurable effect on the project's expected costs.
Monitor EAC Changes After the Update
EAC should be treated as a living forecast rather than a one-time calculation. After an update, compare subsequent actual costs and project progress against the assumptions used in the new estimate. Material deviations can indicate that another forecast update is appropriate.
- Compare actual costs with the assumptions used for remaining work.
- Review major procurement and subcontractor commitments as they develop.
- Monitor labor usage against remaining planned hours.
- Document significant changes in scope, schedule, rates, or cost assumptions.
- Maintain a clear explanation for material movements between EAC versions.
Best Practices for Updating EAC in Costpoint
Establish a consistent review cadence based on project size, contract requirements, and the rate at which project conditions change. Use current actual costs as the starting point, validate the remaining estimate with project managers and functional owners, and retain supporting explanations for material changes.
Finance teams should also coordinate EAC updates with project accounting, procurement, billing, and operational reporting. This creates a consistent financial view and helps management understand whether changes in expected cost are driven by actual performance, remaining work, commercial changes, or updated assumptions.
Summary
Updating EAC in Costpoint requires reviewing actual costs, reassessing the estimate to complete, incorporating current project and procurement information, validating relevant tax and accounting data, and documenting material changes. Using the formula EAC = Actual Cost to Date + Estimate to Complete provides a clear foundation for the forecast, while disciplined review keeps the estimate aligned with current project conditions and financial performance.