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What is " Estimate to Complete" and how it differs from original contract value ?

Project Work Contract Negotiation Project Management
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Question added by Mohammed Asim Nehal , M Asim Nehal & Co , Chartered Accountants
Date Posted: 2015/07/07
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kushal Patel PMP
by kushal Patel PMP , Lead Planner , L & T Technology Services

Estimate To Complete is the estimated cost for the balance amount of work to be completed where as contract value is the complete order value irrelevant of balance estimation.

 

Quazi Mohammad Emarn
by Quazi Mohammad Emarn , Manager (Technical) , Bengal Power Limited

Estimate at completion is the forecasted cost of the project, as the project progresses. There are a number of different ways to determine the EAC.

The most common way to determine EAC is a “bottoms-up” formula where the actual costs (AC) are added to the forecasted remaining spending – the estimate to complete (ETC).

EAC = actual costs (AC) + estimate to complete (ETC)

If the project has encountered a one-time (atypical) variance, the following formula may be used:

EAC = actual costs (AC) + budget at completion (BAC) – earned value (EV)

If the project has encountered a variance that is expected to recur and continue to affect the project (typical), the following formula may be used:

EAC = budget at completion (BAC) ÷ cost performance index (CPI)

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