Estimate to Complete (ETC) in PM terminology mean the amount that is left to spend. Primavera calculates ETC for every activity where cost is allocated. It help us to forecast the Estimate at Completion (EAC) which is calculated as Estimate at Completion = Actual Cost + Estimate to Complete. Actual Cost is into put every time when we update our project, hence calculating ETC is important to give us an accurate forecast for EAC which can help us to prepare our cash flow.
Options for ETC can be changed in following 2 ways:
- Project Level – If you want to change the settings for all of your projects then goto Admin> Admin Preferences and define the default setting for all projects.
- Project level – If you want to change settings only for a particular Project or WBS then goto Project>WBS>Earned Value tab>ETC calculations
There are two options for calculating ETC.
- The first option calculates ETC as the remaining cost.
- The second sets of options calculate ETC based on Earned Value (BCWP)
Option 1 – ETC= Remaining cost for activity
This option is the default option and assumes that the remaining cost is ETC and does not factor EV in calculating your ETC. This would at times not give an accurate description for ETC and hence at EAC cause it does not factor in the performance of your project.
Option 2 – ETC= PF*(Budget at Completion-Earned Value)
The Performance Factor (PF) is a user-selected value used only for computing ETC based on Earned Value. PF can be used to factor in the performance of your project based on your CPI and SPI values.
Case 1 – PF=1
ETC = PF * (BAC-EV)
BAC = is the Total Budgeted Cost of your current project is assigned as Project Baseline.
BAC = is At Complete cost values if the baseline is another project.
EV= is the Earned Value.
If we choose PF=1 then it means that ETC is what was initially budgeted i.e. (BAC) minus what is earned (EV) as opposed to what is spent which is option 1.
Case 2 – PF=1/CPI
ETC = PF * (BAC-EV)
CPI (Cost Performance Index) indicates how efficiently the project is running by defining a rate at which it is earning money vs. spending money.
CPI = Earned Value / Actual Cost
Ex – If CPI is 0.8, indicating that for every Rs.100 spent, the project earns Rs.80.
If we choose this option for PF then it means that ETC = what was initially budgeted (BAC) minus what is earned times the rate at which the project is earning vs. spending money.
In this case, since PF = 1/CPI, the performance factor will increase ETC letting the project manager know that more work needs to be done than would be indicated by just BAC-EV.
Case 3 – ETC = PF * (BAC-EV) where PF=1/(CPI*SPI)
SPI (Schedule Performance Index) indicates how efficiently the project is running by comparing the rate at which the project earns money versus how much we should be spending based on the baseline dates. It generally indicates whether we are ahead or behind schedule.
SPI = Earned Value Cost / Planned Value Cost
Example: If SPI is 0.9, it indicates that for every 10 days elapsed in the baseline project, only 9 days worth of work is accomplished. In this case, using a CPI of 0.8 as defined above since PF = 1/(CPI*SPI), the performance factor will increase ETC letting the project manager know that more work needs to be done than would be indicated by just BAC-EV or (BAC-EV) * 1/CPI.
ETC = what I initially budgeted (BAC) minus what I have earned times the rate of how quickly the project is progressing. This would give us a clearer estimate of how much we will be spending based on our spending and schedule progress.
Case 4 – ETC = PF * (BAC-EV) where PF=Customized Value
In this option we can enter our own customized value for PF. If the value you enter is greater than 1 it will increase the ETC indicating that more effort needs to be expended if the project is to finish on time and on budget. If the value you enter is less than 1 it will decrease the ETC indicating that the project is ahead of schedule. This option can be used by companies who want to use their own custom formulas and values for estimating the At Completion Values for a project.