Actual Cost (AC) is a project management number that shows how much the work on a project has actually cost up to a certain point in time. The AC is a key part of the earned value management (EVM) method, which is a way to measure the success of a project based on how well it is doing in terms of cost and schedule.
The AC is a list of all the direct and secondary costs that have been spent on a project up to a certain point in time. This includes labour costs, goods, tools, overhead costs, and other project-related costs. When figuring out if a job is under or over budget, the AC is often compared to the estimated cost.
This is how to figure out AC:
AC = Direct Expenses + Indirect Expenses
where Direct Costs include things like labor, materials, and tools, and Indirect Costs include things like rent, utilities, and management costs.
For example, let’s say a project has a budget of $100,000 and the real cost of doing the work up to the end of week 5 is $35,000. The project’s total cost would be $35,000. This would show how much the project had really cost up to that point.
Throughout the project, the project manager can use the AC as a standard to measure how well the project is going. If the real cost of the project is more than what was planned, the project is over budget. If the real cost is less than what was planned, the project is under budget. The AC can also be used to figure out other project management metrics, such as the Cost Performance Index (CPI) and the Estimate at Completion (EAC), which are measures of cost efficiency and expected cost, respectively.
