Cost Estimates :: SAS/OR(R) 12.3 User's Guide: Project Management

Cost Estimates

The ETC, or Estimate to Complete, and the EAC, or Estimate at Completion, are two metrics that are central to Earned Value Analysis. The ETC is a projection of the additional funds needed to finish the project. The EAC can be derived as follows (where AC represents the actual costs to date):

For the purposes of this document, each of these two cost estimates takes four forms, illustrated by the following table for ETC:

Table 11.13: ETC Formulas

Acronym	Description	Formula
ETC $_\mr {rev}$	Revised	EAC $_\mr {rev}$ - AC
ETC $_\mr {OTD}$	Overrun to date	BAC - EV = WR
ETC $_\mr {CPI}$	CPI	$\frac{\mr {WR}}{\mr {CPI}}$
ETC $_\mr {CPI\times SPI}$	CPI times SPI	$\frac{\mr {WR}}{\mr {CPI} \times \mr {SPI}}$

The ETC $_\mr {rev}$ is derived directly from the revised schedule, revised costs, and actual costs to date. This form does not make allowances for past performance. It is assumed that this information has already been factored into the updated schedule and costs. Analogous to the ETC $_\mr {rev}$ , the ETC $_\mr {OTD}$ is taken to be the remaining planned value (Budget at Completion less Earned Value), also known as Work Remaining (WR). This form can be thought of as having a performance factor of 1.

The ETC $_\mr {CPI}$ form is the remaining planned value divided by the CPI. In this way favorable cost performance (CPI greater than 1) forces the estimate downward. The performance factor in this case is the inverse of the CPI. Similarly, the ETC $_\mr {CPI\times SPI}$ form employs the inverse of the product of the CPI and SPI as the performance factor. In this case, both cost and schedule performance affect the estimate. For example, if both CPI and SPI are favorable (greater than 1), the estimate is lower.

The Earned Value Management Macros

Cost Estimates