Estimate at Completion (EAC) with Typical CPI
Your project is 40% complete, and the earned value analysis shows CPI = 0.85 and SPI = 0.90. The project sponsor is concerned about the cost overrun. The original budget at completion (BAC) is $1,000,000. What is the Estimate at Completion (EAC) using the typical cost performance index (CPI) assumption?
Quick Answer
The answer is $1,176,471. This is correct because the Estimate at Completion (EAC) using the typical CPI assumption is calculated by dividing the Budget at Completion (BAC) by the cumulative CPI, reflecting the expectation that the current cost efficiency will persist for the remainder of the project. On the PMP exam, this formula—EAC = BAC / CPI—tests your ability to apply earned value management when cost variances are considered non-recoverable and typical. A common trap is confusing this with the “atypical” formula (EAC = AC + (BAC – EV)), so remember: if the question says “typical” or “current CPI will continue,” use BAC divided by CPI. For memory, think “Typical = Total divided by Trend,” where the trend is the CPI.
⚠ Common exam trap
It's easy for candidates to confuse the EAC formula using CPI (BAC / CPI) with the formula using SPI (BAC / SPI) or incorrectly multiply BAC by CPI, leading to wrong answers like $1,111,111 or $850,000.
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
$1,176,471
The typical CPI assumption means the cost performance to date will continue for the remainder of the project. The formula is EAC = BAC / CPI = $1,000,000 / 0.85 = $1,176,470.59, which rounds to $1,176,471. This assumes the same efficiency (CPI) for the remaining work, reflecting the current cost overrun trend.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
$850,000
Why it's wrong here
Dividing BAC by CPI inverts the ratio; $1,000,000 ÷ 0.85 gives $1,176,471, not $850,000. Multiplying BAC by CPI (0.85) yields $850,000, which models costs running below budget — the opposite of this overrun scenario, where CPI below 1 signals spending above plan.
- ✗
$1,000,000
Why it's wrong here
BAC ÷ CPI gives $1,176,471 because CPI of 0.85 signals cost inefficiency; carrying BAC forward assumes remaining work costs exactly as budgeted, ignoring the overrun already observed. $1,000,000 is the original budget, used as the baseline before any performance data is applied.
- ✗
$1,111,111
Why it's wrong here
Dividing BAC by CPI gives 1,000,000 / 0.85 = $1,176,471, not $1,111,111. That figure results from dividing by 0.90, which is the SPI, so it applies the schedule performance index rather than the cost performance index. EAC = BAC / CPI is used when current cost performance is expected to continue.
- ✓
$1,176,471
Why this is correct
EAC equals BAC divided by CPI, so $1,000,000 ÷ 0.85 = $1,176,471. Using the typical CPI assumption assumes remaining work continues at the same cost efficiency, directly reflecting the 0.85 cost performance index reported in the earned value analysis.
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1 more way this is tested on PMP
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. Your project is 40% complete, and the earned value analysis shows CPI = 0.85 and SPI = 0.90. The project budget is $500,000. What is the Estimate at Completion (EAC) assuming the current cost performance is expected to continue?
medium- A.$625,000
- ✓ B.$588,235
- C.$555,555
- D.$500,000
Why B: The Estimate at Completion (EAC) when current cost performance is expected to continue is calculated using the formula EAC = BAC / CPI. Given BAC = $500,000 and CPI = 0.85, EAC = $500,000 / 0.85 = $588,235.29, which rounds to $588,235. This assumes the same cost efficiency (CPI) will persist for the remainder of the project, making option B correct.
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This PMP practice question is part of Courseiva's free PMI certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the PMP exam.