Estimate to Complete

5 minutes 5 Questions

Estimate to Complete (ETC) is a concept used to forecast the cost required to complete the remaining work in a project. It represents an updated estimate of the project budget based on its current performance and any changes in scope or resources. ETC can be calculated by subtracting the Actual Cost (AC) from the Estimate at Completion (EAC), or by dividing the remaining work (Budget at Completion (BAC) - Earned Value (EV)) by the Cost Performance Index (CPI). Calculating ETC helps project managers determine if the project will finish within the original budget or if additional funds will be required, allowing them to manage the project more effectively and make necessary changes to successfully complete the project.

Estimate to Complete (ETC) in Earned Value Management

The 'Estimate to Complete' (ETC) is a crucial component in the field of project management. It is significant because it provides an estimation of the funds required to complete the remaining part of the project.

What it is: In the context of earned value management, Estimate to Complete (ETC) is the anticipated cost to complete the remaining work in a project. It is calculated by subtracting the actual cost (AC) till date from the Estimate at Completion (EAC).

How it works: ETC = EAC - AC. Here, the EAC is the total estimated cost of the project at completion, and AC is the actual cost incurred till the current reporting period.

It is a key element in project management that helps in understanding whether the project is on track concerning budget and if there are any potential budget overruns.

Guide to answer Estimate to Complete (ETC) questions:
Understanding the concept thoroughly is crucial in answering ETC related questions. Remember the formula for ETC, practice calculation-based problems, and carefully read the question to interpret what is asked.

Exam Tips:
1. Understand the relationship between ETC, EAC, and AC.
2. Practice problems related to ETC to build familiarity.
3. In the exam, take care to read the question carefully and understand what is asked before answering.
4. Do not confuse ETC with Estimate at Completion or any other similar terms.
5. Always remember, ETC is about future expenditure, not past.

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Question 1

In a project where the Estimate at Completion (EAC) is $1,500,000 and the Actual Cost (AC) is $900,000, what is the Estimate to Complete (ETC)?

$1,500,000, which is the total project cost estimate $750,000, calculated as half of the Estimate at Completion $900,000, as it represents the remaining budget from the initial estimate $600,000

Correct Answer: $600,000

The correct answer is $600,000.

To calculate the Estimate to Complete (ETC), we need to subtract the Actual Cost (AC) from the Estimate at Completion (EAC).

ETC = EAC - AC
ETC = $1,500,000 - $900,000
ETC = $600,000

This represents the estimated amount of money needed to complete the remaining work on the project.

The other options are incorrect:

$900,000 is actually the Actual Cost, not the Estimate to Complete.

$1,500,000 is the Estimate at Completion, which represents the total project cost estimate, not the remaining work to be done.

$750,000 is not based on any valid calculation method for ETC in project management.

Question 2

In a construction project, the initial budget was pegged at $3,000,000 across a 12-month period. After 6 months, the project has consumed $1,800,000 and achieved 50% of the project scope. What's your Estimate to Complete (ETC)?

$1,400,000 $2,000,000 $2,500,000 $1,800,000

Correct Answer: $1,800,000

Estimate to Complete (ETC) means how much more budget we expect to complete the rest of the project. Here in our scenario, given that the project has consumed $1,800,000 and achieved 50% of the project scope, it means we have spent $1,800,000 to complete half of the project. So, it implies we will require an equal amount of budget (i.e. $1,800,000) to complete the rest of the project (i.e. remaining 50%). Hence, the Estimate to Complete (ETC) would be $1,800,000. Therefore, the answer $1,800,000 is correct. The answer $1,400,000 is incorrect because, it's less than what's been spent so far, and not sufficient to cover the costs of the remaining 50% of the project. The answer $2,000,000 is wrong because it means the remaining 50% of the project would cost more than what's been spent on first half which is not given or implied. Same logic applies to the $2,500,000 answer, So they are also wrong.

Question 3

During a project, the project manager wants to estimate the total cost required to complete the remaining work. Which of the following techniques should the project manager use for this purpose?

Estimated Finish Estimate to Complete Estimate Progression Estimation Completion

Correct Answer: Estimate to Complete

The correct answer is 'Estimate to Complete'. This technique is used to estimate the cost required to complete the remaining work in a project. The other options are incorrect because: - 'Estimation Completion' is not a recognized project management term. - 'Estimated Finish' refers to the expected completion date of a project, not the cost to complete remaining work. - 'Estimate Progression' is not a standard project management technique for estimating remaining costs.

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