What is Estimate to Complete (ETC)?
Estimate to Complete (ETC) represents the forecasted cost needed to finish all remaining project activities. It is calculated by assessing the current project performance and estimating the resources and expenses required to complete the project. ETC is an essential component of project cost management, enabling project managers to predict future financial needs and adjust plans accordingly.
About Estimate to Complete
ETC is critical for maintaining control over a project's budget. It provides a forward-looking view of the costs that will be incurred from the current point to the project's completion. By regularly updating the ETC, project managers can identify potential budget overruns early and take corrective actions to mitigate financial risks. Accurate ETC calculations help ensure that projects are completed within their allocated budgets and financial goals are met.
Best Practices for Calculating ETC
- Accurate Data Collection: Ensure that all actual cost data is accurate and up-to-date. This includes tracking all expenses related to labor, materials, equipment, and overheads.
- Regular Updates: Update the ETC regularly to reflect the latest project performance and any changes in scope or costs.
- Use Reliable Forecasting Methods: Employ consistent and reliable methods for forecasting future costs, such as trend analysis, historical data, and expert judgment.
- Compare with Budget: Regularly compare the ETC with the original budget to identify variances and understand the reasons behind them.
- Adjust for Risks: Incorporate risk assessments and potential impacts into the ETC to provide a more realistic estimate of the final cost.
Estimate to Complete Formula
- Bottom-Up Estimating: Re-evaluate the remaining work and estimate the cost to complete each task. This method involves detailed analysis and is often used when significant changes occur.
- Formula-Based Estimating: Use a formula that incorporates actual costs to date and the project's cost performance index (CPI) to estimate future costs. A common formula is:
- ETC = (BAC - EV) / CPI
- Where BAC is the Budget at Completion, EV is the Earned Value, and CPI is the Cost Performance Index.
- Expert Judgment: Leverage the expertise and experience of project team members to estimate the costs needed to complete the remaining work.
Estimate at Completion v Estimate to Complete
- Estimate to Complete (ETC): Focuses solely on the cost required to complete the remaining work of the project from the current point onward.
- Estimate at Completion (EAC): Predicts the total project cost at completion, combining actual costs to date (AC) with the estimated cost to complete (ETC).
When to Use Estimate to Complete
- Ongoing Monitoring: Use ETC throughout the project lifecycle to continuously monitor and update cost forecasts based on actual performance.
- Identifying Trends: Analyze ETC regularly to identify trends and potential issues that could impact the project budget.
- Making Informed Decisions: Utilize ETC data to make informed decisions about resource allocation, cost control, and project planning.
- Stakeholder Reporting: Provide updated ETC figures in regular reports to stakeholders, ensuring transparency and informed decision-making.
By using ETC, project managers can maintain better control over project finances, anticipate potential budget issues, and make proactive adjustments to ensure successful project completion.
Estimate to Completion Example
By leveraging Mastt, Project Owners and Project Managers can enhance decision making, leading to more efficient project execution, increased quality and more successful outcomes.
Review ETC through real-time Program Dashboards.