Distribution Comparisons of EAC Cost Growth
Program Managers (PMs) require accurate forecasts of cost, schedule, and performance to effectively manage their projects. These metrics are collectively known as the iron triangle of program management (Project Management Institute, 2021). This is an area where PMs may make trade-offs between the three metrics of their program to best deliver capability based on the goals of their organization. Background For DoD acquisitions, expected performance will generally be the most important metric, especially for weapon systems. This leaves cost and schedule metrics for PMs to perform trade-offs. For the cost metric, PMs rely on the Estimate at Completion (EAC) to forecast each component of their program. EACs are generated for the total program and for different Work Breakdown Structure (WBS) elements in the WBS hierarchy (DoD, 2022).
For DoD acquisitions, expected performance will generally be the most important metric, especially for weapon systems.
Program EACs play a key role in establishing the funding required for a DoD acquisition program. The developers of these cost estimates often face a range of challenges with a short timeline and limited resources. The ability to generate reliable cost estimates is a critical function for federal agencies and necessary to support the Office of Management and Budget’s capital programming process (Government Accountability Office [GAO], 2020). Without this ability, agencies are at risk of cost overruns, missed deadlines, and performance shortfalls—all recurring problems that program assessments too often reveal. Furthermore, cost overruns may cause the government to reduce funding for other programs, which affects their results or timely execution. The EAC is an independent forecast of what it will cost to complete any given level of the WBS (Defense Acquisition University, n.d.). The most difficult but also the most crucial EACs are produced at the beginning of the program. The initial EAC becomes the baseline for which the rest of the program’s life cycle is compared. Faced with the greatest degree of known and unknown cost risks, this initial EAC is subject to
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Defense ARJ , Spring 2025, Vol. 32 No. 1
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