In earned value analysis, the Estimate To Complete, usually abbreviated ETC, is the expected remaining cost to complete the project. It is not the final overall project expected budget (that’s the EAC), rather it is the expenditure from now to the end of the project. It does not include what has already been spent.
Thus, it allows the project manager to compare the funding needs required to finish the project with available funding.
The ETC is one of four calculations in Earned Value Management which allow you to forecast the future performance of the project.
- Estimate to Complete (ETC)
- Estimate at Completion (EAC)
- Variance at Completion (VAC)
- To Complete Performance Index (TCPI)
The ETC can be calculated either for each task or for the whole project. There are two ways to calculate ETC:
- Based on past project performance:
ETC = (BAC – EV) / CPI
Each of these input variables (right side of the equation) is normally determined prior to this step:
- Budget at Completion (BAC) is the overall budget for the task.
- Earned Value (EV) is the current progress expressed as a task budget.
- Cost Performance Index (CPI) is the efficiency level of the project from the budget standpoint.
CPI = EV / AC (Where AC = Actual Cost)
- Based on a new estimate
This is called a Management ETC. This means that a new estimate of the remaining tasks in the project is performed.
ETC Example
In this example task we will calculate the ETC based on the past performance of the project.
As per standard earned value procedure, we have already determined the inputs: BAC, PV, EV, and AC.
We have already calculated the four present status variables: SV, SPI, CV, and CPI. Hence,
ETC = (BAC – EV) / CPI
ETC = ($10,000 – $2,500) / 0.56 = $13,393.
| ID | Name | Start | End | BAC | PV | EV | AC | SV | SPI | CV | CPI | ETC |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 100 | Excavation | Apr. 1 | Apr. 10 | $10,000 | $2,000 | $2,500 | $4,500 | $500 | 1.25 | -$2,000 | 0.56 | $13,393 |
This task is worth $10,000 (BAC) and has already spent $4,500 (AC) . Don’t worry, be happy, right? Wrong. Based on its performance so far you will need to spend another $13,393 to complete it.
Of course there are often unique, one-time circumstances which caused this problem or situations which alter the future performance of the project. In these cases a Management ETC (i.e new estimate) is necessary, which is entered into the ETC column. There is nothing wrong with this practice.
To learn more about earned value please try our Earned Value Tutorial.
