Estimate To Complete (ETC) – Another Project Forecasting Tool

Estimate To Complete (ETC)The Estimate To Complete (ETC) is an another Forecasting Tool in the Project Cost Management. It is the expected amount of money that you will spend to complete the remaining work.

For example, let’s say that you have a project, and about 30% of project is completed and 70% has to be completed.

In this case, the Estimate To Complete (ETC) is the expected amount of money to complete the remaining 70% of work.

The ETC tells you how much money you may have to spend to complete the project from this moment. It is the estimated cost to complete the remaining work.

There are many professionals who often confuse ETC with EAC. Estimate At Completion (EAC) is different from the Estimate To Complete (ETC).

EAC is the expected amount of money to complete the project. It tells you that how much the project will cost in the end.

In other words, you can say that the EAC is the expected amount of money to be spent to complete the project.

Note that, when the project starts, EAC is equal to the ETC. As the project progresses, the ETC starts decreasing and at the end of the project, it becomes zero.

Estimate At Completion is equal to the Actual Cost spent on the project plus the expected cost to be spent to complete the balance of the work.

i.e.

Estimate At Completion = Actual Cost already spent + cost spent to complete the balance work

Estimate At Completion (EAC) = Actual Cost already spent (AC) + Estimate To Complete (ETC)

EAC = AC + ETC

ETC = EAC – AC

This means that you can find the value of ETC by subtracting the value of Actual Cost (AC) from the value of the Estimate At Completion (EAC).

Example:

You have a project to be completed in 12 months and the total cost of project is $100,000. Six months have passed and $60,000 is spent but on closer review you find that only 40% of the work is completed so far.

Find the Estimate To Complete (ETC) for this project.

Given in question:

Budget At Completion = $100,000

Actual Cost (AC) = $60,000

Planned Value (PV) = 50% of $100,000

= $50,000

Earned Value (EV) = 40% of $100,000

= $40,000

Cost Performance Index (CPI) = EV / AC

= $40,000 / $60,000

= 0.67

Hence,

Cost Performance Index (CPI) = 0.67

Now,

Estimate At Completion (EAC) = BAC/CPI

= $100,000/0.67

= $149,253.73

Estimate At Completion (EAC) = $149,253.73

Therefore,

Estimate To Complete (ETC) = EAC – AC

$149,253.73 – $60,000

= $89,253.73

 Estimate To Complete = $89,253.73

Now, you can move to next blog-post about the To-Complete Performance Index (TCPI).

I have written an eBook “PMP Formula Guide”  where I have explained all PMP formulas with examples and practice questions.

Here is the link for this eBook:

PMP Formula Guide.

image credit =>renjith krishnan / FreeDigitalPhotos.net

Comments

  1. Fahad,

    Its’ a nice article.

    Theoretically, it looks like Budget at completion (BAC) & Estimate at completion (EAC) both are same. Practically (based on the formulas) they are not same. What is your opinion?

    • Fahad Usmani says:

      Theoretically when project starts, BAC and EAC are same. But as the project progresses EAC keeps on changing unless you’re exactly proceeding as per your approved planned and your actual exependiture remains equal to the planned exependiture

  2. After posting the question, i had realized that EAC is calculated once the project is started. BAC is calculated at the begining of the project.

    Thanks.

  3. Muthu Mohamed says:

    it is really useful article to understand the concepts

  4. Hi,

    Since ETC = EAC – AC, rearranging it will give EAC = AC + ETC.
    But EAC = AC + (BAC – EV), so can I say that ETC = BAC – EV?
    Why can’t I just use ETC = BAC – EV in the example above to calculate the answer?

    Thanks.

  5. @Sandra: As you said EAC = AC + (BAC-EV). My question is how did it come from? As I know, BAC-EV =AC so that means EAC = AC + AC? If yes, it’s incorrect. Please let me know

    Thanks

    • Kenzao

      If past performances are likely to occur in the future, then EAC= AC+(BAC-EV)/CPI where CPI is Cost Performance Index so far.
      If past performances are in line with planification, then CPI=EV/AC=1

      Your statement BAC-EV=AC is not true (never true !!!)

  6. @Sandra
    You can use ETC=BAC-EV if CPI so far is = 1
    The general equation is ETC=(BAC-EV)/CPI

  7. I calculated one of our project by this formula and the result is (-), so it means that there is no cost to complete the project?

  8. Dear Fahad

    I wish to inform you that I passed PMP on 13th Feb, 2014. I also wish to inform you that It was nice experience going though your explanation of the terms. There is no feedback area , so writing it here. Thanks once again.

    Regards

    • Fahad Usmani says:

      Congratulations Anish for passing the Exam. Would be glad if you share you detailed lessons learned here at PMSC.

      Fahad

  9. @ Anish,
    I’ll take any advice you or anyone can provide for taking the test this year. Thanks so much!
    Deby202

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