Policy Number: 614 Category: Project Delivery

Revision: 3
Effective Date: March 24, 2018
Estimate at Completion (EAC) Policy Corporate Project
Policy Owner:
Controls Director

PURPOSE
Establish a corporate level policy governing the preparation of accurate Estimate At Completion (EAC) reports.
The project cost EAC is not only critical to our operations by assessing project status and identifying risks and
opportunities, but it is a primary component used to determine the revenue reported in our financial
statements. The project manager and other employees that develop the EAC are accountable for EAC
compliance to this Policy because of the importance in project performance monitoring, forecasting, and
ensuring accurate financial reporting.

POLICY
It is the policy of CH2M that all EACs prepared for revenue producing projects follow the requirements of this
Policy 614. This includes all projects approved and set up in the corporate financial system as a client project or
affiliate-client project in accordance with Project Set-Up Policy (Policy 903).

APPROACH
The EAC serves as our critical analysis to objectively forecast the financial outcome of a project. The project cost
EAC represents the project management team’s best estimate of expected costs throughout the life of a project
based on assumptions and projections that are reasonable, supportable and documented. Accurate and timely
EACs ensure that interested stakeholders remain informed of the financial progress of a project and serve as a
tool for highlighting project decision points.
There are General Requirements that apply to all EACs prepared for revenue producing projects. Revenue
producing projects additionally fall into either a Standard, Elevated, or High Risk category in accordance with risk
category definitions in Risk Management Policy (Policy 304).
In addition to General Requirements, this Policy 614 includes specific requirements for the completion of the
EAC for projects falling within each risk category.

General Requirements for all EACS

• The project EAC must be approved by the Project Manager and updated by the Project Accountant in the
financial system at least once each fiscal month. (Note 1)
• The EAC is a timely, reliable, predictive estimate of the total direct costs required to complete contractually
authorized requirements for a project. The EAC is the sum of cumulative to date actual costs incurred plus
the forecast cost Estimate to Complete (ETC) the remaining authorized scope of work.
• The EAC must be reasonably documented to identify the set of assumptions and analysis methodology used
to calculate the ETC. The project manager is required to maintain this narrative documentation as the EAC

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 ESTIMATE AT COMPLETION (EAC) POLICY
CATEGORY: PROJECT DELIVERY
REVISION: 3
EFFECTIVE DATE: MARCH 24, 2018
POLICY OWNER: CORPORATE PROJECT CONTROLS DIRECTOR

basis-of-estimate (BOE). The project BOE documentation shall be stored on the project’s SharePoint site (or
equivalent) or the corporate EAC software application in accordance with process S03 Document and
Records Management and S09 Project Controls.
• EAC development includes consideration of all direct costs such as labor and fringe, material, equipment,
travel, subcontracts, and any other direct costs attributable to the project. Indirect costs such as general
and administrative expense (G&A) and overhead are not included in the cost EAC.
• The EAC is organized by project work breakdown structure (WBS) for comparison to budget.
• EAC development should include the use of various objective metrics to validate the reasonableness of the
EAC. Metrics may include, but are not limited to:
– Earned Value (EV) metrics – Cost Performance Index (CPI); Schedule Performance Index (SPI); To
Complete Performance Index (TCPI). EV metrics should be evaluated for both current and cumulative
values and trending data over the past three months.
– Schedule Metrics – Task Start/Finish Variances; Float trend; Schedule margin change; Baseline Execution
Index (BEI); Critical Path Length Index (CPLI).
– Customer feedback including letters of concern; show cause letter; cure notice; fee determination
evaluations; etc.
– Risk and opportunity identification and change in probability and/or value
– Contingency and/or Management Reserve (MR) as percentage of program risk; MR percentage of ETC;
MR change over time.
• The EAC must include early identification of project performance issues and also include assessment of risks
and opportunities with corresponding mitigation or capture plans.
• All personnel involved in the preparation of the EAC must raise any concerns with the calculations of the
amounts of projected costs or potential risks and opportunities included in the EAC to the project
manager. The project manager must then seek to resolve any concerns raised. To the extent that any
person involved in the preparation of the EAC has any unresolved concerns after discussions with the
project manager, he or she must raise those concerns with the responsible manager of projects and client
sector project controls director.
• For projects with a quantitative risk register requirement as specified under process S07 Risk Management,
the EAC basis of estimate must completely and accurately document:
– Probabilistic risk and opportunity values from the quantitative risk register that have been recognized by
inclusion in the EAC, accurate and consistent with documentation maintained in the project risk register

Standard Risk Projects

Standard Risk Projects are required to complete EACs with review by the project manager and approval prior to
update of the EAC in the financial system by the project accountant. The project manager review and approval
specifically confirms compliance with this Policy 614, the Project Controls Policy (Policy 610) and S09 Project
Controls Procedures.

Elevated Risk Projects

Elevated Risk Projects are required to complete EACs in accordance with Standard Risk Project requirements.
Elevated risk project monthly updates must be reviewed by the project controls manager (PCM), project

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 ESTIMATE AT COMPLETION (EAC) POLICY
CATEGORY: PROJECT DELIVERY
REVISION: 3
EFFECTIVE DATE: MARCH 24, 2018
POLICY OWNER: CORPORATE PROJECT CONTROLS DIRECTOR

manager, and project accountant as assigned in the corporate financial system. The PCM and project manager
role cannot be performed by the same person for elevated or higher risk projects.
Elevated Risk Project EACs must additionally be reviewed not less than once per fiscal quarter by the responsible
client sector operations manager and client sector project controls director or their specified delegate. The
review shall include compliance with this Policy 614 and with the reviewer’s functional companywide procedure
requirements.

High Risk Projects

High Risk Projects are required to complete EACs in accordance with Elevated Risk Project requirements and
require additional EAC review and approvals to the Elevated Risk requirement. Greater scrutiny for EAC review
and approval may also be demanded by any of the following CH2M management:
• Corporate Leadership Council members
• Global Director of Project Accounting (GDOPA)
• Director of Risk Management
• Corporate Director of Project and Program Controls
Projects classified as High Risk require documented EAC review and approval not less than quarterly by the
assigned manager of projects (MOP), the responsible client sector operations director, and the client sector
project controls director. The client sector finance director may require additional client sector executive
management approval as assurance for compliance this Policy 614.
In addition to the High Risk Project requirements, the GDOPA defines a subset of the High Risk Projects as
Watchlist EAC Certification projects. This GDOPA specified subset of projects requires additional review
documentation using Watchlist EAC Certification Form (614-1) that is signed by the project manager and project
controls manager. Watchlist EAC Certification Form (614-1) for the GDOPA specified Watchlist EAC Certification
projects must be completed not less than once per fiscal quarter.
The client sector finance director and client sector president certification responsibilities associated with
quarterly preparation of Securities Exchange Commission (SEC) forms 10Q or 10K acknowledges required
compliance to EAC reporting specified by this Policy 614 as an important element of company financial
statement preparation.

EXCEPTIONS
Any exceptions to this Policy must be approved by the Corporate Director of Project and Program Controls,
Director of Risk Management, and GDOPA.

APPLICABILITY
This Policy applies to all active revenue producing projects delivered by CH2M where CH2M exercises
management control or has primary fiscal responsibility.

RESPONSIBILITIES
The project manager is ultimately responsible for establishing the EAC in compliance with this Policy. These
responsibilities include assurance that appropriate EAC approvals are obtained, and that concerns with the EAC
are documented. The project manager shall coordinate with project controls, project accounting, risk, and
finance functional management to ensure qualified personnel are engaged to support the preparation,

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 ESTIMATE AT COMPLETION (EAC) POLICY
CATEGORY: PROJECT DELIVERY
REVISION: 3
EFFECTIVE DATE: MARCH 24, 2018
POLICY OWNER: CORPORATE PROJECT CONTROLS DIRECTOR

maintenance, and approval of the EAC through the life of the project. The client sector finance director is
responsible to ensure financial requirements associated with the EAC are satisfied. Project controls, risk, and
accounting managers are responsible for oversight and compliance with their functionally corresponding policies
and procedures for EACs.
Every employee with responsibilities in the development of an EAC must work with the project manager and
other members of the project team to ensure the EAC:
• Reflects estimates of cost which represent the best estimate of total direct costs at-completion
• Includes all direct costs CH2M expects to incur, or has committed to incur, on the project to deliver the
negotiated and authorized contract scope. Any actual costs incurred for scope that is pending authorization,
such as a pending change order, claim, or a Request For Equitable Adjustment (REA) on U.S. Federal
contracts, shall be captured and tracked separately in the financial system and specifically documented in
the EAC basis-of-estimate
• Excludes forecast of cost associated with uncommitted work known to be out of scope to the contract.
Anticipated future costs associated with a pending change order, claim, or REA shall be documented in the
project risk register and included in the EAC only once the corresponding revenue budget is also updated
through authorized contract modification or Work Without Authorization
• Is based on a sound analysis of risks, opportunities, and an expectation of future performance that is
reconciled to actual experience
• Reflects the expected financial outcome of risks and opportunities that have been communicated to the
project manager and incorporated into the risk register in accordance with the Risk Management Policy
(Policy 304) and S07 Risk Management procedures

APPROVAL REQUIREMENTS
The monthly submission of the updated EAC by the project manager to the project accountant for entry into the
accounting system, including when no change is made to the amount of the EAC (Note 1), documents the project
manager’s assertion that they have complied with the Policy requirements. If any employee believes that an
EAC has not been prepared in compliance with this Policy, they are required to discuss their concerns with the
project manager. The project manager must then seek to resolve any concerns raised prior to the finalization of
the EAC for the current reporting period. To the extent that any person involved in the preparation of the EAC
has any unresolved concerns after discussions with the project manager, or an employee is uncomfortable
having discussions with the project manager, he or she must raise those concerns prior to the finalization of the
EAC for the current reporting period with the responsible manager of projects and client sector project controls
director. If those discussions do not alleviate their concerns, they are required to otherwise raise the concerns
with other members of client sector management, the client sector finance director, human resources, ethics
and compliance, internal audit, or on the Company’s Ethics and Compliance reporting system The GuideLine.

REFERENCES
Risk Management Policy (Policy 304)
Estimate At Completion Policy Watchlist Certification Form (Policy 614-1)
Project Set-Up Policy (Policy 903)
Document and Records Management S03 Process
Risk Management S07 Process

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 ESTIMATE AT COMPLETION (EAC) POLICY
CATEGORY: PROJECT DELIVERY
REVISION: 3
EFFECTIVE DATE: MARCH 24, 2018
POLICY OWNER: CORPORATE PROJECT CONTROLS DIRECTOR

Note 1
Operations Maintenance (OM) projects that recognize revenue on a straight-line basis rather than percentage of
completion basis, and are not considered “construction-type” contracts for financial reporting purposes, shall
only require an update to the EAC when: 1) contract modifications change cost and billing terms; 2) actual cost
performance experience on the project indicates the current EAC is inaccurate; or 3) for any other reason the
EAC is determined to require update by the PM.
Standard risk affiliate-client projects established as an intercompany work exchange agreement (ICWEA) for the
purpose of providing specific staff augmentation labor resources to a CH2M joint venture (JV) or limited liability
corporation (LLC) affiliate will only require an updated EAC when the ICWEA agreement terms are modified,
actual cost experience on the project indicates the current EAC is inaccurate, or for any other reason the EAC is
determined to require update by the PM. ICWEA projects classified as elevated or high risk, or on the EAC watch
list, are not exempt from the EAC update frequency or review requirements of this Policy 614.

Affiliate-client projects, established as an Intercompany Work Agreement (IWA) by CH2M as an affiliate of

Jacobs, shall not require monthly EAC updates. An IWA provides a means to pass through cost from affiliate to
client and is not considered a revenue producing project since the revenue and margin for the work is
maintained by the Jacobs client project. CH2M IWA projects under these circumstances shall maintain the EAC
at the same value as the IWA agreement but not less than the cumulative inception to date actual cost at the
project level.

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