How is the Estimate to Completion (ETC) calculated?

The Estimate to Completion (ETC) is a crucial metric in project management as it helps in forecasting the amount of work or budget that remains to be completed in a project. The correct calculation for ETC is derived from the formula:

ETC = (BAC - EV) / CPI

Here’s why this formula is suitable:

• BAC (Budget at Completion) represents the total budget allocated for the project.
• EV (Earned Value) signifies the value of the work that has actually been completed to date.
• CPI (Cost Performance Index) measures the cost efficiency of the work completed and is calculated as EV/AC (Actual Cost).

By subtracting the earned value (EV) from the budget at completion (BAC), you find out how much of the budget is still available or required for the remaining work. Dividing this figure by the Cost Performance Index (CPI) provides an accurate estimate of how many more resources are needed to complete the project based on the current performance.

This formula accounts for both the budget remaining and the efficiency of the project, allowing for a realistic estimate of future costs based on past performance. Using this formula enables project managers to make better-informed decisions about resource allocation and project timelines.