Estimate To Completion
Estimate to completion (ETC) is the cost required to complete the work represented by a cost item or by the project as a whole, based on the performance to date.
Two methods of calculating ETC are available:
1. ETC = BAC – EV
2. ETC = (BAC – EV) / CPI
where: BAC is the budget at completion, i.e. the amount budgeted for the cost item or project
EV is the earned value
CPI is the cost performance index
Use method 1 if you think that any cost overrun or underrun to date is an exceptional event, and that the remainder of the cost item or project will be completed more or less as you have planned.
Use method 2 if you think that any cost overrun or underrun to date is an indication that your cost estimates were generally too optimistic or pessimistic, as the case may be, so that the remainder of the cost item or project will incur similar overruns/underruns.
Budget at completion (BAC) = $1000
% of work completed = 60%
Earned value (EV) = $1000 x 60% = $600
Actual cost (AC) = $750
Cost performance index (CPI) = $600 / $750 = 0.8
Estimate to completion (method 1) = $1000 - $600 = $400
Estimate to completion (method 2) = ($1000 - $600) / 0.8 = $500