Using Performance Indices to Evaluate the Estimate at Completion

Abstract The estimated final cost of a defense contract, termed the “Estimate at Completion” (EAC), is a controversial number. In their role as advocates, project managers may be reluctant to support an accurate estimate if the estimate is considered too pessimistic for the project to tolerate. The responsible analyst needs a persuasive tool to defend an accurate, but pessimistic EAC. This paper briefly describes the use of performance indices to assess the accuracy of the EAC. Following a brief review of the generic EAC formula, the paper describes how two performances indices, the Cost Performance Index (CPI) and the To-Complete Performance Index (TCPI), may be used to evaluate the accuracy of the EAC. Examples from the A-12 program are used to illustrate the technique.