Analyzing Stability of Estimates at Completion
Methodology The analysis in this article follows the work of Christensen (1996) and Kim et al. (2019) and compares our results to their findings. To assess the stability of EACs, the percent Deviation from Cost at Completion (%DCAC) is calculated for each variation throughout the project life cycle. For EVM, the EACs analyzed in this article include those that utilize cumulative CPI (CPI CUM ), cumulative SPI, i.e., SPI CUM ($), and SCI($). The order of operations for calculating %DCAC is outlined through the following seven equations: Percent Complete = BCWP CUM / Final BAC (1) EAC CPI = ACWP CUM + (BAC - BCWP CUM ) / CPI CUM (2) EAC SPI($) = ACWP CUM + (BAC - BCWP CUM ) / SPI CUM ($) (3) EAC SCI($) = ACWP CUM + [(BAC - BCWP CUM ) / (CPI CUM * SPI CUM ($))] (4) DCAC CPI = (EAC CPI - Final ACWP) / Final ACWP (5) DCAC SPI($) = (EAC SPI($) - Final ACWP) / Final ACWP (6) DCAC SCI($) = (EAC SCI($) - Final ACWP) / Final ACWP (7) To aid in comparing the graphs of percent deviations between each contract effort, 5% increment buckets are created from 0% complete to 100% complete to fix the number of plotted points. This is done by assigning a percent complete that is within 2.5% of a bucket to that specific bucket (this follows the methodology of Tracy and White, 2011). For instance, 2.5% complete and 7.49% complete are assigned to the 5% complete bucket. An average %DCAC is calculated for buckets containing multiple reporting months. Plotting the average %DCACs against the percent complete buckets reveals when during the project life cycle the EAC stabilizes within 10% deviation from final cost for that specific contract effort. Additionally, the %DCACs for each contract effort can be averaged into a single graph that shows the stability of EAC for these long duration development efforts in general. This process is repeated for the three variations of DCAC calculated using Equations (5) through (7) and plotted on the same graph for visual comparison.
62
Defense ARJ , Spring 2025, Vol. 32 No. 1
Made with FlippingBook - Online Brochure Maker