A survey by McKinsey reveals that many projects overshoot budget and schedule by 30-45%, while megaprojects report an alarming 79% budget overrun. This stems from poor cost estimation practices at the approval stage. To combat this issue, project managers utilize the Estimate at Completion (EAC) technique, which calculates projected total project cost based on current expenditures and identified future work. The EAC formula is crucial for preventing budget overruns and making sound financial forecasts throughout the project's lifecycle, ultimately aiding in more informed project management decisions.
Projects often exceed budgets and schedules by 30-45%, with megaprojects seeing overruns of 79%, indicating significant challenges in accurate estimating.
Estimate at Completion (EAC) serves as a predictive tool for project costs, allowing improved budgeting strategies to avoid overruns and enhance decision making.
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