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2.2.4.2

Concept · under Budget, reserves and earned value

PMP® formulas: forecasting and the handful that matter

The PMP formulas worth memorizing fit on one card: the earned value measures, four ways to forecast the estimate at completion (EAC), the estimate to complete (ETC), the variance at completion (VAC), the to-complete performance index (TCPI) and the count of communication channels. The arithmetic is the easy part. The skill that matters is matching the forecast to the cause of the variance. Planned value, earned value and actual cost are defined on earned value management.

Exam
PMP
Domain
Process
Domain weight
41%
Packages
10
Updated
Oct 13, 2026

01Which EAC, and when

Choosing the estimate at completion

What the scenario tells youFormulaWhy it fits
The cause of the variance is still in place: same crew, same method, same supplierEAC = BAC / CPICost efficiency so far is the best predictor of cost efficiency from here on.
The variance came from something that will not repeat, and it has been dealt withEAC = AC + (BAC − EV)Spent money stays spent; the remaining work is expected to cost what it was budgeted to cost.
Cost and schedule pressure both bear on the remaining work, such as a fixed date that forces paid overtimeEAC = AC + (BAC − EV)/(CPI × SPI)When both indices are below 1.0 they compound, so this gives the highest of the three formula forecasts.
The original estimate is no longer credible: assumptions, technology or the plan itself have changedEAC = AC + bottom-up ETCThe remaining work is estimated again from the work packages up.

BAC = budget at completion, EV = earned value, AC = actual cost, CPI and SPI = cost and schedule performance indices.

02Read the cause before you reach for a formula

Cheat sheets print a dozen formulas in one column, which makes the job look like recall. Recall is the half you can do on autopilot. When a scenario hands you EV, AC and budget at completion, look for the sentence that says why the variance happened; that sentence decides the row in the table above.

Each row is the right formula for a different situation, so careful arithmetic will not tell you which one applies. Reading the cause will.

03One status date, four forecasts

BAC $360,000 · PV $192,000 · EV $144,000 · AC $160,000, so CPI = 0.90 and SPI = 0.75

ForecastWorkingResult
EAC, current CPI continues360,000 / 0.90$400,000
EAC, remaining work at budget160,000 + (360,000 − 144,000)$376,000
EAC, CPI and SPI both apply160,000 + 216,000 / 0.675$480,000
ETC, from the first EAC400,000 − 160,000$240,000
VAC, from the first EAC360,000 − 400,000−$40,000

The same project produces forecasts from $376,000 to $480,000. That $104,000 spread is why the cause in the stem matters more than the arithmetic.

04ETC, VAC and the formulas kept elsewhere

Estimate to complete

ETC = EAC − AC is the money still to be spent, counted from today. When the team re-estimates the remaining work bottom-up, the order flips: the new ETC comes first and EAC = AC + ETC.

Variance at completion

VAC = BAC − EAC is the overrun or underrun expected at the finish line. It follows the same sign rule as the other variances: negative means the project expects to spend more than its budget.

On other pages

Three-point estimates, beta and triangular, with their standard deviation, are worked through on PERT and three-point estimating. Expected monetary value, probability times impact with threats counted as negative, is on expected monetary value and decision trees. Reserves and the cost baseline that these forecasts are measured against sit in budget, reserves and earned value.

05The efficiency you still need

To-complete performance index (to BAC)

TCPI=(BAC − EV) divided by (BAC − AC)

BAC − EV
the budgeted value of the work still to do
BAC − AC
the money left in the budget

Worked example

  • BAC = $360,000
  • EV = $144,000
  • AC = $160,000
  1. Work remaining: 360,000 − 144,000 = 216,000.
  2. Money remaining: 360,000 − 160,000 = 200,000.
  3. Divide: 216,000 / 200,000.

TCPI = 1.08

Reading itTo land on the original budget, each remaining dollar must buy $1.08 of planned work while the project has been running at 0.90. A gap that wide calls for a decision with the sponsor, not a pep talk. If management accepts a new EAC, put EAC in place of BAC in the denominator: 216,000 / 240,000 = 0.90, equal to the CPI, which confirms the EAC came from the current-CPI formula.

06Communication channels

Channels in a group of n people

Channels=n(n − 1) divided by 2

n
the number of people who communicate on the project, the project manager included

Worked example

  • n = 12
  1. Multiply n by one less than n: 12 × 11 = 132.
  2. Halve it, since each channel joins two people: 132 / 2.

Channels = 66

Reading itChannels grow roughly with the square of the headcount, which is why larger teams need a planned communication approach. The planning side is in communication and knowledge transfer.

07Forecasts and indices to work out

A lasting trend, a one-off, or an estimate nobody believes anymore? Settle that and the formula follows.

Work packages 10

  1. WP 01Sustained productivity decline is diagnosed. Given cumulative EV=$420k, AC=$480k, BAC=$900k and continuing low CPI, which EAC and justification is correct?

    Debrief answer to open the notes

    1. A$900,000 is just BAC, which assumes the overrun will stop.
    2. BA blended CPI and SPI weighting fits when schedule pressure drives cost; the stem points to a cost-efficiency trend, and no SPI is given.
    3. CAdding an arbitrary 0.85 factor has no basis in the data.
    4. DCorrect: CPI = 420 / 480 = 0.875; EAC = $480k + ($900k − $420k) / 0.875 ≈ $1,029,000, assuming current efficiency continues.
  2. WP 02Scope growth caused a 15% increase in work while productivity variance caused a 10% schedule slip. Which EAC method should be selected?

    Debrief answer to open the notes

    1. ADeferring the forecast leaves the sponsor without an updated estimate while the variances grow.
    2. BOriginal assumptions are no longer valid after both scope growth and lower productivity.
    3. CA CPI-only EAC assumes past efficiency explains everything and misses the new work.
    4. DCorrect: match the method to the cause: re-estimate new scope bottom-up, and use a CPI-based forecast for the ongoing productivity variance.
  3. WP 03Schedule variance in period 3 resulted from a one-time vendor delay. Ongoing productivity remains normal. Which forecasting approach is most appropriate?

    Debrief answer to open the notes

    1. ACorrect: a one-time event should not change the forecasting method; keep baseline durations and add the specific delay.
    2. BApplying current SPI to the whole project treats a one-off delay as a trend.
    3. CCumulative SPI on remaining work assumes the delay repeats, overstating the slip.
    4. DA moving average still carries the one-time delay into future periods.
  4. WP 04BAC is $1,200,000 and the selected EAC is $1,380,000. What is the Variance at Completion and how should it be communicated to the sponsor?

    Debrief answer to open the notes

    1. ACorrect: VAC = BAC − EAC = $1,200,000 − $1,380,000 = −$180,000, an expected overrun the sponsor should hear with its drivers and options.
    2. BThe sign is wrong: an EAC above BAC means an overrun, not savings.
    3. CVAC is a cost measure; attributing it to schedule variance misreads the cause.
    4. DVAC is not zero, since EAC exceeds BAC by $180,000.
  5. WP 05A project manager is analyzing the performance of an ongoing project. The BAC is $800,000. At the 40% completion point, the EV is $320,000 and the AC is $400,000. If this performance trend continues, what will be the Estimate at Completion (EAC)?

    Debrief answer to open the notes

    1. A$800,000 is BAC, which assumes the cost overrun stops at once.
    2. B$880,000 is AC + (BAC − EV), which assumes future work goes as planned rather than at the current trend.
    3. C$720,000 subtracts the overrun from BAC instead of adding to it.
    4. DCorrect: CPI = $320,000 / $400,000 = 0.8, and EAC = BAC / CPI = $800,000 / 0.8 = $1,000,000.
  6. WP 06The project manager expects the team to use 100 more hours than planned by project completion. Which of the following terms best describes this?

    Debrief answer to open the notes

    1. AEarned value is the budgeted value of work done, not a forecast difference at completion.
    2. BCorrect: variance at completion compares the budget with the forecast at completion; expecting 100 extra hours means a VAC of −100 hours.
    3. CETC is the amount still needed from now, not the difference from plan.
    4. DBAC is the original total budget, not a deviation from it.
  7. WP 07A project manager is overseeing a marketing campaign with an estimated cost at completion (EAC) of $10,000. The actual cost (AC) incurred to date is $3,000, and the campaign's completion efficiency is 85%. What is the campaign's Estimated Cost to Complete (ETC)?

    Debrief answer to open the notes

    1. A$5,500 does not follow from EAC − AC; it mixes in the efficiency figure incorrectly.
    2. BCorrect: ETC = EAC − AC = $10,000 − $3,000 = $7,000; the efficiency figure is not needed.
    3. C$13,000 adds AC to EAC instead of subtracting it.
    4. D$8,500 applies the 85% figure to EAC, which is not how ETC is calculated.
  8. WP 08Evaluate the progress of a product development project. The project has been 60% completed and has a budget of $500,000. So far, $400,000 has been spent, and future development costs are anticipated to align with the planned budget. Determine which formula should be used to calculate the new estimate at completion (EAC).

    Debrief answer to open the notes

    1. ACorrect: when future work is expected at budgeted rates, EAC = AC + (BAC − EV), so the past variance is not projected forward.
    2. BA bottom-up ETC is used when the original estimates are no longer valid and the remaining work is re-estimated.
    3. CThe CPI × SPI formula assumes both indices keep affecting future work, the opposite of this scenario.
    4. DBAC / CPI assumes the current cost efficiency continues, which the stem rules out.
  9. WP 09A project has a budget at completion (BAC) of $250,000. At the latest status date, earned value is $130,000 and actual cost is $150,000. Management insists that the project still finish within the original budget. What is the to-complete performance index (TCPI), and what does it mean?

    Debrief answer to open the notes

    1. A0.87 is the CPI (130,000 / 150,000), the efficiency achieved so far, not the efficiency still required.
    2. B1.15 is AC / EV, the inverse of CPI; it describes past performance, not the required future efficiency.
    3. C0.83 is the formula inverted, (BAC − AC) / (BAC − EV); it reverses the meaning of the result.
    4. DCorrect: TCPI = (BAC − EV) / (BAC − AC) = 120,000 / 100,000 = 1.20; above 1 means the remaining work must be more efficient than planned.
  10. WP 10A project team of 6 people, including the project manager, grows to 9 people after a scope change adds a data analytics workstream. How many communication channels are added?

    Debrief answer to open the notes

    1. AThis counts the new people, not the new channels between them and everyone else.
    2. BCorrect: Channels go from 6 × 5 / 2 = 15 to 9 × 8 / 2 = 36, so 21 channels are added.
    3. C36 is the new total number of channels, not the number added by the change.
    4. DThis uses n(n − 1) without dividing by 2: 72 − 30 = 42.

Open a row to answer. Keys: 1–4 or A–D answer, N opens the next row.