In this article on Earned Value Reporting we’ll look Estimate to Completion. As explained in the book “The Project Management Question and Answer Book” by Newell and Grashina, the Estimate to Completion describes the expected cost needed to complete all the remaining work for a schedule activity, work breakdown structure component, or the project.
Newell and Grashina’s book is the basis for much of the information in this discussion on Estimate to Completion.
What is the estimate to completion?
The estimate to completion or the ETC is an estimate of the additional money that will be necessary to complete the project. It is calculated from the estimate at completion that we discussed previously.
The estimate to complete is something that can and should be derived as quickly and as early in the process and/or life cycle of the project as possible because it will help the team budget accordingly. However, if the estimate is done early and there is a need at some point to modify it, this can be done once or - if needed -even more than once during the life cycle of the specific project in question.
Can you get into trouble with estimates at completion? You bet you can. As we have seen in the discussion of the EAC, there are many ways that this estimate can be made. The most common form is the budget at completion divided by the cost performance index. This is only a rough estimate of what the project will cost when it is completed.
Using the estimate at completion predicts that the project will overrun or underrun its budget at the end of the project. While it is a good thing to keep the stakeholders and the managers of your company informed that projects are in trouble, it is a weak support for asking that the project be given additional budget. A good project manager who wants to keep his job will take the EAC and use it as additional supporting information to show that the project budget was originally overor understated. In addition to the EAC, the project manager should have much supporting information as to why the project is in the condition that it is in.