# DAVION

## SYSTEMS

# 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.

Example

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