21 Jun The Power of Probabilistic EAC Analysis with KAT
We recently received a request to calculate the Estimate at Completion (EAC) for a Project. The request seemed somewhat unusual because the Project Control team was issuing EAC figures every month. The Project was already 80% complete, and the Client wanted a more accurate EAC to justify their request for additional budget. The monthly EAC figures were constantly changing, causing confusion!!
It’s important to note that the scope of the EAC calculation was specifically for the PMC contractor and not the EPC contractor. We did not calculate the EAC for the EPC contractor!
Our solution was to calculate a probabilistic EAC for the main cost codes of the PMC contractor. To perform this calculation, we utilized the KAT Cost Analysis feature. Here’s a breakdown of the process:
- We created the PMC project in KAT and assigned seven cost codes, as shown in the below screenshot:
- For each cost code, we developed multiple scenarios based on the average and standard deviation (STD) of the Cost Performance Index (CPI). To determine the average and STD, we utilized various ranges of historical data and on some cases, the expected future values. Here are a few examples of the scenarios we created for different cost codes
Procurement Support:
Construction Support:
- Next, we ran an analysis for each scenario and extracted the probabilistic EAC. Here are some of the results we obtained
Procurement Support:
Construction Support:
- We then calculated a few overall EAC figures by combining different scenarios for each cost code. Here are two examples:
EAC1:
EAC2:
Working with KAT made the analysis process easy and provided unique insights and outputs. It’s a valuable tool that even project managers and project directors can use for analysis without relying solely on the Project Control team. So, get your copy and develop an analysis that is required for making more decisive decisions
For more detail refer to: https://khonopc.com/services/kat/
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