Estimate to Complete (ETC) in Project Management

Estimate to Complete (ETC) is a crucial financial performance index and project management measure that provides an estimate of the remaining cost expected to be paid to complete a project. It serves as a valuable tool for project managers to monitor and control project costs and ensure project profitability.

Forecasting Tool

ETC is utilized as a forecasting tool alongside the earned value calculation to develop performance reports. By utilizing ETC, project managers can proactively identify deviations from the project budget and take necessary corrective actions to maintain project viability.

Calculation Methods

There are two widely used methods for calculating ETC:

Bottom-up Cost Estimation

This method involves a detailed analysis of the remaining project activities. Each activity’s cost is estimated, and these estimates are then summed to determine the total cost of the remaining work. This approach is often used when there is a need for a highly accurate estimate.

ETC = Estimate at Completion (EAC) – Actual Cost (AC)

This method calculates the ETC by subtracting the actual cost incurred from the estimate at completion. This approach is commonly used when the project is well underway, and a significant portion of the work has already been completed.

Difference from Estimate at Completion (EAC)

It is essential to distinguish between ETC and Estimate at Completion (EAC). EAC predicts the total costs at the end of the project, while ETC predicts the cost that the project still needs to complete.

Sources

• Primetric: How to Calculate the Estimate to Complete (ETC) [+ Examples]
• PM Study Circle: Estimate to Complete (ETC): Definition, Formula, Example & Calculation
• LinkedIn: ESTIMATE AT COMPLETION vs. ESTIMATE TO COMPLETE

FAQs

What is Estimate to Complete (ETC) in project management?

ETC is a financial performance index and project management measure that shows the remaining cost expected to be paid in order to complete a project.

How is ETC calculated?

There are two common methods for calculating ETC:

1. Bottom-up Cost Estimation: This method involves calculating the cost of each remaining activity and then adding them together.
2. ETC = Estimate at Completion (EAC) – Actual Cost (AC): This method calculates the ETC by subtracting the actual cost incurred from the EAC.

What is the difference between ETC and Estimate at Completion (EAC)?

EAC predicts the total costs at the end of the project, while ETC predicts the cost that the project still needs to complete.

When is ETC used?

ETC is used as a forecasting tool to monitor and control project costs. It is particularly useful when there are deviations from the project budget, as it helps project managers identify and address potential cost overruns.

What are the benefits of using ETC?

The benefits of using ETC include:

• Improved cost control
• Enhanced project forecasting
• Increased project profitability
• Better decision-making

What are some limitations of ETC?

Some limitations of ETC include:

• It is an estimate and may not always be accurate.
• It can be time-consuming to calculate, especially for large and complex projects.
• It requires accurate and up-to-date project data.

How can the accuracy of ETC be improved?

The accuracy of ETC can be improved by:

• Using a reliable cost estimation method.
• Regularly updating the ETC as the project progresses.
• Considering potential risks and uncertainties that may impact the project cost.

What are some best practices for using ETC in project management?

Some best practices for using ETC in project management include:

• Using ETC in conjunction with other project management tools and techniques.
• Communicating the ETC to stakeholders and obtaining their buy-in.
• Monitoring and controlling the ETC throughout the project lifecycle.