When to use it
Use it to discuss the likely overrun or underrun and the decision it requires.
Do not describe this as total available funding without explaining reserves and authority limits.
- Define the scope, status date and units before collecting the inputs.
- Substitute the values into the formula and retain their units.
- Interpret the result against the assumptions and decide what evidence or action is needed next.
Formula & inputs
BAC and EAC must refer to the same defined work.
Worked example
A delivery project has budget at completion of €900,000. At the same status date, planned value is €450,000, earned value is €360,000 and actual cost is €400,000. All values use the same scope and price basis.
The forecast exceeds the work budget. Explain the cause and how any proposed response affects scope, risk and funding.
Common pitfall
Changing the baseline to remove a negative variance without approval destroys the comparison.
Source & related material
Standard quantitative technique; this explanation is by fannarmaximus. No single inventor is claimed. The arithmetic is computed from explicit inputs, not copied from an official sample question.