Estimate to Complete (ETC) Calculation in P6 with Different Scenarios

Earned Value Management (EVM) offers project KPIs, which in turn help in the estimation of the balance cost to complete. Therefore, EVM is the best tool for project cost control.

Regarding Earned Value Analysis, Oracle Primavera P6 calculates most of the values automatically for a resource-loaded schedule. Estimate to Complete (ETC) calculations require some user inputs to best relate to the project situation and the forecast.

Estimate to Complete (ETC) is the remaining cost required to complete the project. This cost can not be calculated based on a single mathematical formula only and requires an actual depiction of the project which would be different for every project.

Case Study for ETC Calculations

In this article, scenarios for different project situations are summarized so that the nearest possible value of ETC should be obtained. Those scenarios are illustrated along with back-end Oracle Primavera P6 calculations.

As an example, we consider the following project with Earned Value calculations shown in different columns:

Some EVM calculations are as follows:

Budget at Completion (BAC) = $8,997,521

Schedule % Complete =71.83%

Performance % Complete = 64.08%

Planned Value (PV) = $6,462,629

Earned Value (EV) = $5,756,751

Actual Cost (AC) = $6,485,637

CPI= 0.89

SPI = 0.89

Estimate to Complete (ETC) = $2,511,377

Estimate at Complete (EAC) = $ 8,997,014

Now we will examine how these values are generating ETC along with different scenarios.

Current Scenario

Oracle Primavera P6 offers ETC to be set as per user requirements. This option is available under WBS and we can set it as shown here:

Here, we can select ETC for different values of the Performance Factor (PF).

As indicated in the window above, ETC = remaining cost for the activity. The current value of ETC, therefore, comes to $2,511,377 as calculated

Calculations are made as follows:

The remaining cost for the activity = Estimate at Completion – Actual Cost

The remaining cost for the activity = EAC – AC

Remaining cost for the activity = $8,997,521 – $6,485,637

The remaining cost for the activity = $2,511,377

Scenario 1: The project had deviated from budget initially, but it will recover later on

In this scenario, if we are thinking that the project had deviated initially and we are optimistic that it will recover later on, the ETC calculations will be as per the following formulas:

First, we will calculate the Estimate at Completion (EAC).

EAC = AC + (BAC – EV)

EAC = $6,485,637 + ($8,997,521 – $5,756,751)

EAC = $9,717,547

Now, ETC can be calculated as:

ETC = EAC – AC

ETC = $9,717,547 – $6,485,637

ETC = $3,231,910

Scenario 2: If the project will perform in the same manner as it is performing now

Mostly, for calculations, we assume that the project will continue performing in the same manner as it is performing in the present. This scenario will provide us with calculations based on the current pace and the ETC calculations will be as follows:

First, we will calculate Estimate at Completion (EAC).

EAC = BAC/CPI

EAC = $8,997,521/0.89

EAC = $10,121,157

Now, ETC can be calculated as:

ETC = EAC – AC

ETC = $10,121,157 – $6,485,637

ETC = $3,635,519

Scenario 3: To re-calculate cost per the latest forecast of remaining works

This could be the best possible method for some projects to find the closest value of ETC. Here, instead of assuming future progress or roughly assuming that the project will go as it is going, we take some steps to find the ETC value closest to reality.

So, we re-calculate the cost of the remaining works, and adding it to Actual Cost (AC) will provide the value of EAC which can be very close to the actual value at the end of the project. But this step may take some time to calculate.

In order to find the latest forecast for the remaining works, we need to filter for remaining activities. Then, for each activity, we need to work out the remaining cost. Finally, all these costs will add up to the total cost of the remaining work.

This option is not available in Oracle Primavera P6. Instead, we need to calculate it outside Primavera P6.

Calculations for ETC will be as follows:

ETC = Bottom-up estimate to complete

ETC = $3,130,000 (as per calculations of bottom-up estimate for remaining works for this project)

Conclusion

Estimate to Complete (ETC) calculation is a critical part of EVM and sometimes it is not simple to calculate ETC. Different scenarios are applied depending on the project situation. The best possible method is to re-calculate cost per the latest forecast of the remaining works which gives an ETC value very close to reality. Contact our experts today for CPM Scheduling Services.