A complete lowdown on Estimate To Complete (ETC). This presentation defines and explains project forecasting using ETC. It describes different scenarios and their associated formulas. It uses an example project to calculate ETC in different scenarios.
2. AGENDA
• Definition & Explanation
• Calculating ETC
• Example Project
• ETC Formulas
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3. AGENDA
• Definition & Explanation
• Calculating ETC
• Example Project
• ETC Formulas
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4. ESTIMATE TO COMPLETE (ETC)
Estimate to Complete or ETC is the expected
cost to finish all the remaining project work.
How much money is needed to complete the
remaining project work?
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5. PROJECT STATUS
• On Control Date, some work has been completed while some is
remaining.
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COMPLETED REMAINING
TOTAL PROJECT SCOPE/WORK
6. CALCULATING ETC
• Problem Statement – To Calculate Expected Cost of Remaining Work
(ETC)
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EARNED VALUE
MONETARY VALUE
OF
REMAINING WORK
ORIGINAL PROJECT BUDGET (BAC)
ACTUAL COST/EXPENDITURE ETC
FORECASTED PROJECT BUDGET
?
7. AGENDA
• Definition & Explanation
• Calculating ETC
• Example Project
• ETC Formulas
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8. CALCULATING ETC
Is ETC Equivalent to Monetary Value of Remaining Work?
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9. CALCULATING ETC
Is ETC Equivalent to Monetary Value of Remaining Work?
• No
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10. CALCULATING ETC
Is ETC Equivalent to Monetary Value of Remaining Work?
• No
• The ETC depends on the Project Team’s efficiency of utilizing the
money
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11. CALCULATING ETC
Is ETC Equivalent to Monetary Value of Remaining Work?
• No
• The ETC depends on the Project Team’s efficiency of utilizing the
money
• If Efficiency = 1, ETC will be equal to Monetary Value
If Efficiency < 1, ETC will be more than Monetary Value
If Efficiency > 1, ETC will be less than Monetary Value
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Reference –
Basics of Earned Value Analysis
Earned Value Management System Explained in Easy
12. CALCULATING ETC
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Reference –
Estimate to Complete
ETC = (monetary value of remaining work)/(future projected cost
efficiency)
13. CALCULATING ETC
Monetary value of remaining work = monetary value of total work –
monetary value of completed work
Monetary value of remaining work = BAC – EV
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Reference –
Estimate to Complete
ETC = (monetary value of remaining work)/(future projected cost
efficiency)
14. CALCULATING ETC
Monetary value of remaining work = monetary value of total work –
monetary value of completed work
Monetary value of remaining work = BAC – EV
In EVM, Cost Efficiency is represented as Cost Performance Index (CPI)
Let us represent the future projected cost efficiency as CPIp
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Reference –
Estimate to Complete
ETC = (monetary value of remaining work)/(future projected cost
efficiency)
16. AGENDA
• Definition & Explanation
• Calculating ETC
• Example Project
• ETC Formulas
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17. PROJECT PLAN – EXAMPLE
PROJECT
Refer to the example in the previous presentation
(https://www.slideshare.net/pmalik2/101-a-beginners-guide-to-earned-
value-management)
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Project Scope Build 80 Tables
Project Time Estimate (Duration) 5 Days
Cost Estimate Per Table $1000
Project Cost (Budget) $1000*80 = $80000
18. PROJECT STATUS – EXAMPLE
PROJECT
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Work Completed 35 out of 80 tables
Actual Expenditure $36000 for building 35 tables
Remaining Project Work 45 tables
ETC ?
19. AGENDA
• Definition & Explanation
• Calculating ETC
• Example Project
• ETC Formulas
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20. SCENARIO I
• The project team believes that the project’s past performance will
continue to effect the future performance.
• The project would continue to expend money at the current rate.
• The remaining work would be completed at project’s current cost
efficiency.
• Replacing CPIp with CPI, Generic ETC equation becomes
ETC = (BAC – EV) / CPI
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21. SCENARIO I - CALCULATION
• ETC = ($80000-$35000)/($35000/$36000)
= $46286
• It simply means that the project team will require $46286 to build
the remaining 45 tables.
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22. SCENARIO II
• The project team believes that the project’s past performance will
not effect the future performance.
• The irregularities of the past would not be repeated in future.
• The remaining work would be completed at project’s 100% cost
efficiency (as per the original estimates).
• Replacing CPIp with 100%, Generic ETC equation becomes
ETC = (BAC – EV)
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23. SCENARIO II - CALCULATION
• ETC = ($80000-$35000)
= $45000
• It simply means that the project team will require $45000 to build
remaining 45 tables.
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24. SCENARIO III
• The project team believes that the project’s past performance will
not effect the future performance.
• The team also believes that project would expend money neither at
current rate nor at 100%.
• The remaining work would be completed at new cost efficiency -
CPIp.
• Generic ETC equation becomes formula for the current Scenario
ETC = (BAC – EV) / CPIp
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25. SCENARIO III - CALCULATION
• Let us assume that the project team determines that future cost
efficiency would be 120% (or 1.2).
• ETC = (80000 – 35000)/1.2
= $37500
• It simply means that the project team will require $37500 to build 45
remaining tables.
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26. SCENARIO IV
• After analysing the project’s past performance, The project team
believes that the original estimates were not good.
• The cost of remaining work should be re-estimated i.e. ETC should
be determined afresh.
• A fresh ETC can by found by estimating the cost of remaining
(unfinished) work from the Work Breakdown Structure (WBS).
• The project team can re-estimate the cost of remaining work
components (work packages and activities) and then total then total
them Upwards in the WBS to determine a fresh ETC.
• There is no ETC formula for this scenario.
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