Analyzing Stability of Estimates at Completion
Conclusion The purpose of this article was to understand the accuracy of EVM metrics in estimating cost at completion for long duration development efforts. Research by Christensen (1996) and Kim et al. (2019) assessed the stability of EACs for development and production contracts. Christensen (1996) found EAC CPI achieves stability within 10% deviation from cost at completion at 50% complete, while EAC SPI and EAC SCI achieve stability at contract initiation. Specific to development contracts, Christensen found EAC CPI and EAC SPI to achieve stability at 60% complete and EAC SCI at 20% complete. Kim et al. (2019) replicated Christensen’s (1996) study using modern contracts and discovered similarities and differences in results. Kim et al. (2019) found EAC CPI achieves stability within 10% deviation from cost at completion at 55% complete, which is comparable to Christensen’s (1996) findings. However, inconsistent with Christensen’s findings, Kim et al. (2019) found EAC SCI achieves stability within 10% deviation from cost at completion at 50% complete, closely mirroring EAC CPI .
Program managers for development efforts can expect error in final cost estimates regardless of the metric being used (either EVM or ES) until approximately 70% complete.
This article’s researchers analyzed results for the 27 development efforts that are at least 5 years in duration and subsequently concluded that EACs achieved stability later in the project life cycle than what Christensen (1996) and Kim et al. (2019) found for development and production efforts. EACs calculated appear to achieve stability within 10% deviation from cost at completion at approximately 70% complete. Furthermore, the EVM and ES methods as well as the metrics individually showed no significant differences in stability results between each other. This conclusion showed robustness to changes in effort duration. Thus, program managers for development efforts can expect error in final cost estimates regardless of the metric being used (either EVM or ES) until approximately 70% complete. The magnitude of error can vary greatly depending on the characteristics of the program and the scope of the effort. One program in our dataset, for
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Defense ARJ , Spring 2025, Vol. 32 No. 1
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