Calculating EAC (Estimate at completion) for revenue recognition

Created by Monica Madan, Modified on Fri, 15 Dec 2023 at 12:14 PM by Monica Madan

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EAC (Estimate at Completion): refers to the projected total number of hours required to complete a project.

ETC (Estimate to Complete): refers to the remaining number of hours the system forecasts the project needs to complete based on the resource allocation plan.

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By using the EAC, project managers can gain insight into the expected total hours needed to complete the project and make informed decisions regarding resource allocation, scheduling, and budgeting.

For example: if the Estimated at Completion (EAC) exceeds the allocated budget for a project, it serves as an early indication that there is a potential for going over budget. Recognizing this allows project managers to take proactive measures rather than reacting after the budget has already been surpassed. This proactive approach enables more effective budget management throughout the project's duration. 

Calculation for ETC and EAC:

In Rocketlane, you can allocate resources for your projects manually or use auto-allocate to take care of resource allocation for you. The calculation of ETC and EAC depends on whether the project was auto-allocated or manually allocated.

If resources are not "auto-allocated"

ETC = The sum of all the remaining hours from today onwards based on the existing resource allocation data. 

EAC = ETC + Total tracked hours

Let's consider a project called "Modert," which lasts 20 days. The budgeted hours for the project is 200h and the resources allocated on the project is 8h/day for 20 days = 160h

Today is Day 4 (October 21st) of the 20 day project. The time tracked by the resources in timesheets until today (Day 4) is 24h

Now, the ETC is the remaining number of allocated hours from today (Day 4)

ETC = 16 (remaining days)* 8h/day = 128h

EAC = 128h (ETC) + 24h (tracked hours) = 152h

If resources are "auto allocated:"

ETC = For all tasks that are not yet completed, ETC is the sum of the difference between the estimated effort and the tracked hours for that task. 

If the tracked hours for a task are greater than or equal to the estimated effort, then ETC for that task as 0.

EAC = ETC + Total tracked hours. 

Let’s consider a sample project Acme with the below information:


Total budgeted hours = 60h

Total Allocated hours = 50h

Sum of tracked hours for completed and in-progress tasks = (7+8+6)h = 21h

ETC = ((10-6) under requirement gathering task)4 + 10 +10)h = 24h

EAC = ETC + Tracked hours = 45h

It's important to note that these calculations rely on the available information within the system and are continuously updated as progress is made on projects and tasks. By ensuring that task statuses and tracked hours accurately reflect reality, you can obtain precise insights for your projects.

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