Estimate to Complete ETC Another Project Forecasting Tool

Estimate to Complete (ETC) is a forecasting tool used with the earned value calculation to develop performance reports.

The cost will constantly change during your project. Therefore, clients are relentlessly interested in the costs of the remaining tasks.

In project management, you must adopt proven techniques to reach an estimate for the stakeholders.

One such technique is the Estimate to Complete (ETC). This is another forecasting technique used along with the Estimate at Completion.

In today’s blog post, we will discuss this forecasting technique, its definition, formula, and examples with calculations.

Estimate to Complete (ETC)

Definition: Estimate to Complete ((ETC) is a forecasting technique that gives you the approximate cost required to complete the remaining project work.

This is an important forecasting technique. I will explain this topic with three simple examples. Afterward, we will solve some mathematical questions.

Example I

You are constructing a house with a budget of 100,000 USD. You are halfway to completion, and you find that you may have to spend more than you planned. Therefore, you ask a team member to give you a new estimate for the remaining work.

They calculated the cost of the remaining work and informed you that from now on, it will take 70,000 USD to finish building the house.

This 70,000 USD is the Estimate to Complete.

Example II

You are working on a project that is 30% completed.

The Estimate to Complete is the expected cost to complete 70% of the remaining work.

Example III

There is another scenario to calculate the Estimate to Complete.

You are constructing a five-story building and cannot complete the project because of financial issues. Therefore, you cut your building from five to three stories to adjust the budget.

The Estimate to Complete will help you calculate your savings.

There is another forecasting tool that is often confused with the Estimate to Complete. This tool is the Estimate at Completion (EAC).

Estimate at Completion is the project’s total cost at the end, while the Estimate to Complete is the cost required to complete the remaining work.

When the project starts, the EAC is equal to the ETC. As the project progresses, the ETC decreases; in the end, it becomes zero.

Estimate to Complete (ETC) Formula

You can use two formulas to calculate ETC:

  1. Bottom-up Cost Estimation
  2. ETC = Estimate at Completion – Actual Cost

ETC Examples with Calculations

We will discuss the two examples of ETC using both formulas and calculations.

Case I: Bottom-Up Cost Estimation

Here, you calculate the cost of the remaining work. Afterward, you add them to get the total cost of the remaining work.

There is no formula for the Bottom-Up Cost Estimation technique.

Example of ETC (Case I)

You have a project to build a government department’s building for 500,000 USD. You have spent 200,000 USD to date. However, you realize that your cost estimation was flawed, and you need to re-calculate your budget for the remaining part of the project.

So, you re-estimate the cost of the remaining work. The new estimate is: 125,000 USD for construction, 75,000 USD for plumbing, 150,000 USD for painting, and 50,000 USD for other expenditures.

Calculate the Estimate to Complete (ETC).

Given in the question:

BAC = 500,000 USD

AC = 200,000 USD

Construction Cost =125,000 USD

Plumbing Cost = 75,000 USD

Painting Cost =150,000 USD

Other expenditures =50,000 USD

You are using Bottom-Up Cost Estimation. You will calculate the cost of each activity/work package, and then you will add them to get the final figure.

Estimate to Complete = Cost of construction + Cost of plumbing + Cost of painting + Other expenditures

= 125,000 + 75,000 +150,000 + 50,000

= 400,000 USD

Hence, the Estimate to Complete is 400,000 USD.

Case II: ETC = EAC – AC

Finding the Estimate to Complete is straightforward in this case. You will calculate the Estimate at Completion, and then subtract the actual cost from it.

Estimate to Complete = Estimate at Completion – Actual Cost

ETC = EAC – AC

There are several ways to calculate the EAC. You can visit my blog post on Estimate at Completion to calculate the EAC in different cases.

Example of ETC (Case II)

You have a project with a BAC of 100,000 USD and 12 months. 6 months have passed, and you have spent 60,000 USD. Upon closer view, you find that only 40% of the work has been completed. Your project is expected to perform at the same cost.

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

Given in the question:

Budget at Completion (BAC) = 100,000 USD

Actual Cost (AC) = 60,000 USD

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

= 50,000 USD

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

= 40,000 USD

To determine the ETC, you need the EAC.

And, EAC = BAC / CPI

Hence, Cost Performance Index (CPI) = EV / AC

= 40,000 / 60,000

= 0.67

Therefore, Cost Performance Index (CPI) = 0.67

Now, Estimate at Completion (EAC) = BAC / CPI

= 100,000 / 0.67

= 149,253

Estimate at Completion (EAC) = 149,253 USD

Now, Estimate to Complete (ETC) = EAC – AC

= 149,253 – 60,000

= 89,253 USD

Hence the Estimate to Complete (ETC) for this project is 89,253 USD.

Estimate to Complete (ETC) Table

estimate to complete ETC table

Estimate to Complete (ETC) Graph

estimate to complete etc

Summary

The Estimate to Complete (ETC) is the expected cost required to complete the remaining work of the project. You will use this forecasting tool when the previous estimate is no longer valid and needs a new estimate for the remainder of the work. This tool is useful whenever the cost baseline deviates. You will use this tool to communicate the information to stakeholders to approve the new budget.

How have you used Estimate to Complete (ETC) in your project? Please share your experience in the comments section.

This blog post is the sixth in a series of eleven on earned value management and project forecasting. Please read through my earlier posts before reading this post if you’re coming here from a search engine or a referral.

The following are the links for other blog posts:

The Estimate to Complete (ETC) tool is essential for the PMP exam. You may see a few questions from this topic on your exam.

Fahad Usmani, PMP

I am Mohammad Fahad Usmani, B.E. PMP, PMI-RMP. I have been blogging on project management topics since 2011. To date, thousands of professionals have passed the PMP exam using my resources.