{"id":107404,"date":"2022-09-17T05:28:19","date_gmt":"2022-09-17T05:28:19","guid":{"rendered":"https:\/\/monday.com\/blog\/?p=107404"},"modified":"2025-10-18T09:49:22","modified_gmt":"2025-10-18T14:49:22","slug":"estimate-at-completion-eac","status":"publish","type":"post","link":"https:\/\/monday.com\/blog\/project-management\/estimate-at-completion-eac\/","title":{"rendered":"Estimate at Completion (EAC) and Its Use in Project Tracking"},"content":{"rendered":"<figure style=\"text-align: center;\"><\/figure>\n<p>The beginning of a project is always surrounded by expectations, and many ideas seem perfect when they\u2019re still on paper. Planning every detail, setting goals, and working diligently is often the way to reach the pot of gold at the end of the rainbow. But to get there, it\u2019s also necessary to prepare for the unforeseen, especially when costs are involved.<\/p>\n<p>The good news is that there\u2019s a powerful metric to guide stakeholders down this path of numbers and changes. EAC, short for Estimate at Completion, is a formula used to calculate the total cost of a project that\u2019s faced with uncertainty. It&#8217;s a project forecasting tool that is essential for understanding the impacts of unforeseen events on the future costs of a project, helping to mitigate losses and reallocate resources.<\/p>\n<p>In this article, we\u2019ll explain how this formula works and how to apply it in your projects. We\u2019ll also show you how monday.com tools can help you calculate EAC in real-time, enabling confident decision-making about the future of the project.<\/p>\n<p style=\"text-align: center;\"><a class=\"cta-button blue-button\" aria-label=\"Get started\" href=\"https:\/\/auth.monday.com\/users\/sign_up_new\" target=\"_blank\">Get started<\/a><\/p>\n<h2>What is EAC?<\/h2>\n<p>Estimate at Completion is the current expectation of the total costs of a project once completed. The calculation is the sum of the amount invested at the time of measurement and the costs necessary to complete the work.<\/p>\n<blockquote><p>Estimate at Completion (EAC) = Actual Cost (AC) + Estimate to Completion (ETC)<\/p><\/blockquote>\n<p>When unforeseen events crop up, such as delays or unplanned expenses, managers use an EAC to reassess the total costs required to complete the project. In this context, an EAC helps stakeholders measure the impacts of changes more accurately and better manage available resources.<\/p>\n<blockquote><p>Since it reflects the expectation of the final cost of a project that\u2019s still in progress, running EACs periodically is a smart move, especially for complex projects.<\/p><\/blockquote>\n<p>A fundamental observation needs to be made: don\u2019t confuse Estimate <em>at<\/em>\u00a0Completion with Estimate <em>to<\/em>\u00a0Completion, short for ETC. While the former is a calculation of accrued and expected costs, the latter only refers to the expected costs to complete the project. With that said, it\u2019s important to be aware of the relationship between an EAC and a BAC, otherwise known as Budget at Completion.<\/p>\n<h3>How do I calculate EAC?<\/h3>\n<p>There are a few different formulas for calculating EAC, and the one you choose depends on the realities of your project. The four most common formulas are:<\/p>\n<ul>\n<li><strong>EAC = AC + ETC:<\/strong>\u00a0This formula is the most generic and is often used when BAC is estimated from inaccurate or erroneous data. In this case, the EAC represents the sum of Actual Cost (AC) and Estimate to Completion (ETC).<\/li>\n<li><strong>EAC = BAC \/ CPI:<\/strong>\u00a0This is the most recommended calculation when the project is in progress without interference. To check the EAC, divide the BAC by the Cost Performance Index (CPI).<\/li>\n<li><strong>EAC = AC + BAC &#8211; EV \/ CPI x SPI:<\/strong>\u00a0This is the formula used when schedule delays and expenses increase. In this case, it\u2019s necessary to add the Schedule\u00a0Performance Index (SPI) and the Earned Value (EV) to the equation.<\/li>\n<li><strong>EAC = AC + (BAC &#8211; EV)<\/strong>\u00a0This formula is used when unforeseen events are overcome, and it\u2019s believed that new interference\u00a0will not occur until the end of the project.<\/li>\n<\/ul>\n<h3>How do I know if the EAC is correct?<\/h3>\n<p>There are endless variables that impact costs in project management and, in turn, the calculations of the EAC. The biggest impact, however, is the initial calculations of the BAC, so it pays (quite literally) to be diligent when tracking and categorizing costs during the\u00a0project planning stage. With a robust BAC in place, EAC calculations are more accurate and help keep projects on track and within budget.<\/p>\n<h2>EAC vs. Budget at Completion (BAC)<\/h2>\n<p>Both EAC and BAC are cost calculations, though for different project periods. While EAC deals with the final cost forecast of a project that\u2019s already underway, BAC deals with the cost that was authorized at the beginning of the project \u2014 the original budget.<\/p>\n<p>In practice, the EAC evolves, as it takes unforeseen circumstances and financial variations into account and is calculated at various moments throughout the project life cycle. BAC, on the other hand, is static, used as a parameter to define the earned value, or EV, of the project.<\/p>\n<p>An example: a team calculates $100,000 as the BAC for a 1-year project. After 3 months, scheduling delays impact the project and the team needs more resources to complete everything on time. With the added costs, a new budget is made and the project cost estimate is $160,000.<\/p>\n<p>In this case, it\u2019ll be necessary to spend $60,000 more than initially anticipated, making the EAC larger than the BAC. Keep in mind, in this example, there are still 9 months to complete the project and other unforeseen events may occur, necessitating a new EAC. In such cases, the <a href=\"https:\/\/monday.com\/blog\/project-management\/project-management-challenges\/\">project manager&#8217;s challenge<\/a> is to mitigate the impact of actionable expenses, reallocate resources, and increase the team&#8217;s performance.<\/p>\n<h2 class=\"PlaygroundEditorTheme__h2\" dir=\"ltr\">Using EAC to track project performance<\/h2>\n<p>So far, we have seen how EAC is necessary to realistically guide a project through uncertain scenarios. If you want the best chance of success in the face of uncertainty, EAC is an excellent tool for monitoring project performance.\u00a0Because EAC is a calculation that forecasts the final cost based on the information available at the time, it\u2019s not enough to use it reactively. You should also use EAC proactively.<\/p>\n<blockquote><p>When you periodically estimate project costs with EAC and compare the results over time, you can track project costs much more accurately.<\/p><\/blockquote>\n<p>Another strategy is to analyze the EAC together with\u00a0<a href=\"https:\/\/monday.com\/blog\/project-management\/kpi\/\">other important KPIs<\/a>, such as the BAC \u2014 mentioned before \u2014 and the CPI, short for the Cost Performance Index. The CPI calculates the difference between the EV and the actual cost, or AC, at the present moment.<\/p>\n<p>The CPI, which should also be calculated regularly, shows how efficiently the project budget is being spent. By tracking these metrics, stakeholders know how well teams are performing and can reallocate resources to the tasks and activities that need them at that moment. These methods and calculations also help identify potential roadblocks that can seriously impact project success, which are only a few of their many benefits.<\/p>\n<h2><strong>Benefits of an evolving EAC model<\/strong><\/h2>\n<p>There\u2019s no single method of calculating the Estimate at Completion. But for a reliable result, it&#8217;s important to use the formula most compatible with your finances. At the same time, you may need to refine your calculations during the project life cycle, which is referred to as an &#8220;evolving EAC model.&#8221; Agility in the way you calculate EAC has several benefits:<\/p>\n<ul>\n<li><strong>Helps ensure earned value:<\/strong>\u00a0Calculating the EAC along with other indicators enables the development of new strategies that offset and prevent the accumulation of negative impacts on the EV of the project.<\/li>\n<li><strong>Identify waste<\/strong>: Calculating EAC regularly helps detect areas of overspending, which can impact project progress (<b><strong class=\"PlaygroundEditorTheme__textBold\">read<\/strong><\/b>: no more budget overruns).<\/li>\n<li><strong>Better allocate resources:<\/strong>\u00a0An adaptive EAC model\u00a0<a href=\"https:\/\/monday.com\/blog\/project-management\/stakeholder-analysis-ultimate-guide\/\">helps stakeholders better understand priorities<\/a>\u00a0and identify opportunities for resource allocation whether they be adjusting budgets across teams or making changes to the team structures.<\/li>\n<li class=\"PlaygroundEditorTheme__listItem\" value=\"4\"><strong>Minimize risk:<\/strong> EAC provides a more accurate approach to estimate the actual costs of your project, and minimize risks throughout the project lifecycle.<\/li>\n<\/ul>\n<p>To better understand the benefits involved, let\u2019s explore how an EAC calculation can help a project deal with unexpected expenses.<\/p>\n<h2><strong>Using EAC to adapt a project when new expenses arise<\/strong><\/h2>\n<p>Imagine that you\u2019re working at a medium-sized civil engineering company and you\u2019re managing a new venture. The initial timetable forecasts a year of work divided into four quarters. The Budget at Completion is $700,000, including all resources (break it down into actual hours) and material costs. The project plan indicates that $400,000 of the budget will be spent during the first quarter with the remaining $300,000 divided evenly over the last three quarters.<\/p>\n<p>With high investment power during the first stage, the team starts with a bang. But after a month of progress, a governmental agency hits the company with a fine due to a regulatory oversight related to the project and suspends work for four weeks. In this new reality, the EAC calculation needs to consider these variables:<\/p>\n<ul>\n<li>How much of the budget was spent so far<\/li>\n<li>A new timeline accounting for the interruption<\/li>\n<li>Any additional costs required to complete the first stage<\/li>\n<li>The costs of the fine<\/li>\n<li>The cost required to complete the next stages given the changes<\/li>\n<li>Any other loss of resources due to work interruption, such as employees leaving the company<\/li>\n<\/ul>\n<p>This example illustrates the importance of the BAC since the overall objective is to keep the EAC lower than the BAC. Therefore, it\u2019s critical to set aside a portion of your project\u2019s budget to\u00a0<a href=\"https:\/\/monday.com\/blog\/project-management\/contingency-plan\/\">account for the unexpected<\/a>\u00a0when creating the project management plan. This budget buffering can help you mitigate waste, avoid resource cuts, and better distribute remaining resources.<\/p>\n<p>Great project planning, budgeting, and knowing how and when to use an EAC will help you keep your projects on track and moving toward success. But these activities are only as good as the tools used to perform them.<\/p>\n<p style=\"text-align: center;\"><a class=\"cta-button blue-button\" aria-label=\"Get started\" href=\"https:\/\/auth.monday.com\/users\/sign_up_new\" target=\"_blank\">Get started<\/a><\/p>\n<h2><strong>Capitalizing on an EAC\u00a0with monday.com<\/strong><\/h2>\n<p>Financial calculations often involve poring over spreadsheets and checking and rechecking data. But there are simpler and more reliable alternatives available. monday.com is designed from the ground up to execute every aspect of your project, from planning and budgeting to creating the reports and forecasts you need to keep everyone aligned.\u00a0With monday.com\u2019s easily customizable\u00a0<a href=\"https:\/\/monday.com\/blog\/project-management\/estimate-template\/\">Estimation Model Templates<\/a>, you can accurately estimate costs, whether you\u2019re planning an extravagant birthday party or need an EAC midway through a complex construction project.<\/p>\n<p><img decoding=\"async\" class=\"aligncenter size-full wp-image-97235\" src=\"https:\/\/monday.com\/blog\/wp-content\/uploads\/2022\/02\/image6-4.png\" alt=\"Comparison of project estimate and cost\" width=\"996\" height=\"483\" srcset=\"https:\/\/monday.com\/blog\/wp-content\/uploads\/2022\/02\/image6-4.png 996w, https:\/\/monday.com\/blog\/wp-content\/uploads\/2022\/02\/image6-4-300x145.png 300w, https:\/\/monday.com\/blog\/wp-content\/uploads\/2022\/02\/image6-4-768x372.png 768w\" sizes=\"(max-width: 996px) 100vw, 996px\" \/><\/p>\n<p>The template does all the calculations for you automatically so you can get on with the business at hand. Additionally, because monday.com is made for teams, you won\u2019t have to worry about juggling different versions of a spreadsheet. With shared access to task boards, reports, and a central source of data, you can keep budgets aligned, teams engaged, and all your projects on track from beginning to a successful end.<\/p>\n<p style=\"text-align: center;\"><a class=\"cta-button blue-button\" aria-label=\"Get started\" href=\"https:\/\/auth.monday.com\/users\/sign_up_new\" target=\"_blank\">Get started<\/a><\/p>\n<h2><strong>Project success is the sum of great tools and techniques<\/strong><\/h2>\n<p>Overcoming obstacles and unexpected challenges are part and parcel of project management. Even the greatest planners face unexpected situations that are seemingly insurmountable. But with EAC expertise and a <a href=\"https:\/\/monday.com\/blog\/project-management\/cost-management-software\/\">cost management platform <\/a>to manage your projects seamlessly, even the most critical contingencies are reduced to road bumps.<\/p>\n<div class=\"accordion faq\" id=\"faq-EAC \">\n  <h2 class=\"accordion__heading section-title text-left\">FAQs<\/h2>\n    <div class=\"accordion__item\">\n    <a class=\"accordion__button d-block\" data-toggle=\"collapse\" data-parent=\"#faq-EAC \" href=\"#q-EAC -1\"\n      aria-expanded=\"false\">\n      <h3 class=\"accordion__question\">What are the 4 basic assumptions in EAC?         <svg class=\"angle-arrow angle-arrow--down\" width=\"32\" height=\"32\" viewBox=\"0 0 32 32\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n          <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.5303 20.8839C16.2374 21.1768 15.7626 21.1768 15.4697 20.8839L7.82318 13.2374C7.53029 12.9445 7.53029 12.4697 7.82318 12.1768L8.17674 11.8232C8.46963 11.5303 8.9445 11.5303 9.2374 11.8232L16 18.5858L22.7626 11.8232C23.0555 11.5303 23.5303 11.5303 23.8232 11.8232L24.1768 12.1768C24.4697 12.4697 24.4697 12.9445 24.1768 13.2374L16.5303 20.8839Z\" fill=\"black\"\/>\n        <\/svg>\n      <\/h3>\n    <\/a>\n    <div id=\"q-EAC -1\" class=\"accordion__answer collapse collapse--md\" data-parent=\"#faq-EAC \">\n      <p>Before you calculate the EAT you need to take into account these four assumptions: <\/p>\n<p>1. An estimate to complete assumption<br \/>\n2. The project will perform at the budgeted rate<br \/>\n3. The future performance will be in line with the present cost variance (CV) and cost performance index (CPI)<br \/>\n4. The future performance will be in line with the present cost performance index (CPI) and schedule performance index (SPI)<\/p>\n    <\/div>\n  <\/div>\n    <div class=\"accordion__item\">\n    <a class=\"accordion__button d-block\" data-toggle=\"collapse\" data-parent=\"#faq-EAC \" href=\"#q-EAC -2\"\n      aria-expanded=\"false\">\n      <h3 class=\"accordion__question\">What are the steps involved in a bottom-up EAC approach?        <svg class=\"angle-arrow angle-arrow--down\" width=\"32\" height=\"32\" viewBox=\"0 0 32 32\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n          <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.5303 20.8839C16.2374 21.1768 15.7626 21.1768 15.4697 20.8839L7.82318 13.2374C7.53029 12.9445 7.53029 12.4697 7.82318 12.1768L8.17674 11.8232C8.46963 11.5303 8.9445 11.5303 9.2374 11.8232L16 18.5858L22.7626 11.8232C23.0555 11.5303 23.5303 11.5303 23.8232 11.8232L24.1768 12.1768C24.4697 12.4697 24.4697 12.9445 24.1768 13.2374L16.5303 20.8839Z\" fill=\"black\"\/>\n        <\/svg>\n      <\/h3>\n    <\/a>\n    <div id=\"q-EAC -2\" class=\"accordion__answer collapse collapse--md\" data-parent=\"#faq-EAC \">\n      <p>Here's what you need to do to conduct a bottom-up estimation calculation.<br \/>\n1. Review your work breakdown structure (WBS) to identify all remaining tasks and various components of your project<br \/>\n2. Estimate the cost to complete each individual task, looking at current data and actual performance<br \/>\n3. Add it all up to arrive at the EAC for your entire project<\/p>\n    <\/div>\n  <\/div>\n    <div class=\"accordion__item\">\n    <a class=\"accordion__button d-block\" data-toggle=\"collapse\" data-parent=\"#faq-EAC \" href=\"#q-EAC -3\"\n      aria-expanded=\"false\">\n      <h3 class=\"accordion__question\">What is EAC used for?         <svg class=\"angle-arrow angle-arrow--down\" width=\"32\" height=\"32\" viewBox=\"0 0 32 32\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n          <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.5303 20.8839C16.2374 21.1768 15.7626 21.1768 15.4697 20.8839L7.82318 13.2374C7.53029 12.9445 7.53029 12.4697 7.82318 12.1768L8.17674 11.8232C8.46963 11.5303 8.9445 11.5303 9.2374 11.8232L16 18.5858L22.7626 11.8232C23.0555 11.5303 23.5303 11.5303 23.8232 11.8232L24.1768 12.1768C24.4697 12.4697 24.4697 12.9445 24.1768 13.2374L16.5303 20.8839Z\" fill=\"black\"\/>\n        <\/svg>\n      <\/h3>\n    <\/a>\n    <div id=\"q-EAC -3\" class=\"accordion__answer collapse collapse--md\" data-parent=\"#faq-EAC \">\n      <p>Estimate at Completion (EAC) is an important financial metric used by project managers to forecast the total cost of a project at its conclusion. It represents the final budget required by combining initial estimates, current performance, and future project performance. It helps managers make more informed decisions and realistic projections of how much it would cost to complete each project.<\/p>\n    <\/div>\n  <\/div>\n    <div class=\"accordion__item\">\n    <a class=\"accordion__button d-block\" data-toggle=\"collapse\" data-parent=\"#faq-EAC \" href=\"#q-EAC -4\"\n      aria-expanded=\"false\">\n      <h3 class=\"accordion__question\">What is the formula for variance at completion?        <svg class=\"angle-arrow angle-arrow--down\" width=\"32\" height=\"32\" viewBox=\"0 0 32 32\" fill=\"none\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\">\n          <path fill-rule=\"evenodd\" clip-rule=\"evenodd\" d=\"M16.5303 20.8839C16.2374 21.1768 15.7626 21.1768 15.4697 20.8839L7.82318 13.2374C7.53029 12.9445 7.53029 12.4697 7.82318 12.1768L8.17674 11.8232C8.46963 11.5303 8.9445 11.5303 9.2374 11.8232L16 18.5858L22.7626 11.8232C23.0555 11.5303 23.5303 11.5303 23.8232 11.8232L24.1768 12.1768C24.4697 12.4697 24.4697 12.9445 24.1768 13.2374L16.5303 20.8839Z\" fill=\"black\"\/>\n        <\/svg>\n      <\/h3>\n    <\/a>\n    <div id=\"q-EAC -4\" class=\"accordion__answer collapse collapse--md\" data-parent=\"#faq-EAC \">\n      <p>Variance at Completion (VAC) is the difference between the Budget at Completion (BAC) and the estimate at Completion (EAC). (VAC = BAC - EAC)<\/p>\n    <\/div>\n  <\/div>\n  <script type='application\/ld+json'>{\n    \"@context\": \"https:\\\/\\\/schema.org\",\n    \"@type\": \"FAQPage\",\n    \"mainEntity\": [\n        {\n            \"@type\": \"Question\",\n            \"name\": \"What are the 4 basic assumptions in EAC? \",\n            \"acceptedAnswer\": {\n                \"@type\": \"Answer\",\n                \"text\": \"<p>Before you calculate the EAT you need to take into account these four assumptions: <\\\/p>\\n<p>1. An estimate to complete assumption<br \\\/>\\n2. The project will perform at the budgeted rate<br \\\/>\\n3. The future performance will be in line with the present cost variance (CV) and cost performance index (CPI)<br \\\/>\\n4. 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It helps managers make more informed decisions and realistic projections of how much it would cost to complete each project.<\\\/p>\\n\"\n            }\n        },\n        {\n            \"@type\": \"Question\",\n            \"name\": \"What is the formula for variance at completion?\",\n            \"acceptedAnswer\": {\n                \"@type\": \"Answer\",\n                \"text\": \"<p>Variance at Completion (VAC) is the difference between the Budget at Completion (BAC) and the estimate at Completion (EAC). (VAC = BAC - EAC)<\\\/p>\\n\"\n            }\n        }\n    ]\n}<\/script><\/div>\n\n<div style=\"text-align: right;\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The beginning of a project is always surrounded by expectations, and many ideas seem perfect when they\u2019re still on paper. Planning every detail, setting goals, and working diligently is often the way to reach the pot of gold at the end of the rainbow. But to get there, it\u2019s also &#8230;<\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_title":"Estimate At Completion (EAC) And Its Use In Project Tracking","_yoast_wpseo_metadesc":"Keeping projects on track requires the right set of tools and techniques. The EAC is a method used to forecast costs relative to a project\u2019s initial budget.","monday_item_id":18041094022,"monday_board_id":0,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[13904],"tags":[14016],"class_list":["post-107404","post","type-post","status-publish","format-standard","hentry","category-project-management","tag-project-cost-management"],"acf":{"lobby_image":false,"post_thumbnail_title":"","hide_post_info":false,"hide_bottom_cta":false,"hide_from_blog":false,"landing_page_layout":false,"cluster":"","display_dates":"updated","featured_image_link":"","banner_url":"","main_text_banner":"Try monday.com for projects","sub_title_banner":"Join the 152K+ customers who use monday.com","sub_title_banner_second":"","banner_button_text":"","below_banner_line":"","use_customized_cta":false,"display_subscribe_widget":false,"custom_schema_code":"","activate_cta_banner":false,"sidebar_color_banner":"","custom_tags":[14016],"faqs":[{"faq_title":"FAQs","faq_shortcode":"EAC ","faq":[{"question":"What are the 4 basic assumptions in EAC? ","answer":"<p>Before you calculate the EAT you need to take into account these four assumptions: <\/p>\n<p>1. An estimate to complete assumption<br \/>\n2. The project will perform at the budgeted rate<br \/>\n3. The future performance will be in line with the present cost variance (CV) and cost performance index (CPI)<br \/>\n4. The future performance will be in line with the present cost performance index (CPI) and schedule performance index (SPI)<\/p>\n"},{"question":"What are the steps involved in a bottom-up EAC approach?","answer":"<p>Here's what you need to do to conduct a bottom-up estimation calculation.<br \/>\n1. Review your work breakdown structure (WBS) to identify all remaining tasks and various components of your project<br \/>\n2. Estimate the cost to complete each individual task, looking at current data and actual performance<br \/>\n3. Add it all up to arrive at the EAC for your entire project<\/p>\n"},{"question":"What is EAC used for? ","answer":"<p>Estimate at Completion (EAC) is an important financial metric used by project managers to forecast the total cost of a project at its conclusion. It represents the final budget required by combining initial estimates, current performance, and future project performance. It helps managers make more informed decisions and realistic projections of how much it would cost to complete each project.<\/p>\n"},{"question":"What is the formula for variance at completion?","answer":"<p>Variance at Completion (VAC) is the difference between the Budget at Completion (BAC) and the estimate at Completion (EAC). (VAC = BAC - EAC)<\/p>\n"}]}],"hide_time_to_read":false,"disclaimer":"","cornerstone_hero_cta_override":{"label":"","url":""},"post_date":"20240903","show_contact_sales_button":"0","custom_header_banner":false},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.6 (Yoast SEO v26.6) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Estimate At Completion (EAC) And Its Use In Project Tracking<\/title>\n<meta name=\"description\" content=\"Keeping projects on track requires the right set of tools and techniques. 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