ETC vs EAC: Top Key Differences and Similarities

In my years of experience managing projects, I’ve often found myself grappling with two key concepts: Estimate to Complete and Estimate at Completion in project management. These two metrics, while seemingly similar, serve distinct purposes in the realm of project management. In project management, it’s important to understand ETC vs EAC and the ETC vs EAC formula. I’ve managed many projects and learned the differences between these two key measures. ETC helps us guess how much we’ll need to spend to finish the work, which helps us stick to our budget. However, EAC combines what we’ve spent so far and the ETC, giving us a real-time look at how much the project might cost in total. Consider enhancing your skills with Project Management training and certification to bolster your project management acumen.

What is Estimate to Complete (ETC)?

ETC, or Estimate to Complete, is a projection of the cost required to complete the remaining work in a project. In my experience, it’s a valuable tool for keeping a project within its budget.

What is Estimate at Completion (EAC)?

However, EAC, or the Estimate at Completion in project management, is the total cost anticipated at the project's completion. It’s a combination of the actual cost incurred till date and the ETC.

ETC vs EAC: Comparison Table

Let us now take a brief look at what is the difference between ETC and EAC:

Parameter	Estimate to Complete (ETC)	Estimate at Completion (EAC)
Definition	Cost to complete remaining work	Total cost at project completion
Focus	Remaining Work	Total Project Cost
Calculation	(BAC - EV) / CPI	AC + ETC
Decision Making	Resource Allocation	Overall Project Budget Control
Impact	Affects future cash flow needs	Indicates potential budget overruns/underruns
Usage	Mid-project to control budget	Start of project to set budget
Change	Changes as project progresses	Generally constant, changes if scope changes

Difference Between Estimate to Complete and Estimate at Completion in Project Management

1. ETC vs EAC: Focus

Understanding ETC or EAC in terms of the metric's focus, ETC focuses on anticipating the future costs required to complete the remaining work in a project. It is a forward-looking metric, aiming to project the financial landscape ahead. In contrast, EAC shifts its focus to the total project cost, incorporating both actual expenses incurred so far and the estimated costs to finish the project. EAC provides a real-time assessment of the overall financial health of the project, blending past expenditures with future projections.

firebrand

2. Estimate to Complete and Estimate at Completion: Calculation

Suppose you have a project with a Budget at Completion (BAC) of $1000. Halfway through, you’ve spent $600 (Actual Cost or AC), but you’ve only completed work worth $400 (Earned Value or EV). Your Cost Performance Index (CPI) is 0.67, which is calculated as EV divided by AC.

To calculate ETC:

ETC= (BAC - EV) / CPI =0.671000−400 ≈895.52

This means you estimate it will cost approximately $895.52 more to complete the project in accordance with the ETC formula in PMP. Boost your skills with a Project Management Professional training course to improve your expertise.

Now, to find EAC:

EAC=AC+ETC=600+895.52=1495.52

So, as per the formula for EAC in project management, the estimated total cost at completion is approximately $1495.52, indicating you will go over budget if things continue as they are.

3. ETC vs EAC: Decision Making

When it comes to decision-making or choosing between ETC vs. EAC in project management guides you in different directions. ETC focuses on resource allocation. By understanding the additional funding required for remaining tasks (ETC), you can effectively allocate resources like materials or manpower. On the other hand, EAC helps with overall project budget control. It provides a complete picture of potential overruns or underruns, allowing you to make informed adjustments if needed.

4. ETC vs EAC: Impact

ETC directly affects your future cash flow needs. It tells you how much extra money you'll need to complete the project, helping you plan for upcoming expenses. In contrast, EAC focuses on the bigger picture, indicating potential budget overruns or underruns. By showing the total expected cost (EAC), you can identify if the project might go over budget and take corrective actions.

5. ETC vs EAC: Usage

ETC (Estimate to Complete) is typically used mid-project when you need to control and forecast future spending to complete the project. It’s a tool for project managers to adjust their strategies and resources to stay within budget. EAC (Estimate at Completion), on the other hand, is used from the start of the project to set the initial budget and throughout the project to update the total expected cost. It helps stakeholders understand the overall financial picture and make informed decisions about project funding.

6. ETC vs EAC: Change

ETC may change as the project progresses, adapting to the actual performance and any modifications in work scope. In contrast, EAC is generally constant but will change if there are significant scope changes. These metrics are dynamic, reflecting the evolving nature of project management. They ensure that estimates remain relevant and aligned with the project’s status.

7. Estimate to Complete and Estimate at Completion: Example

Imagine you’re saving up to buy a bike that costs $200. You’ve already saved $50. Now, you think it’ll cost you $180 more to reach your goal because prices went up (ETC).

 EAC is your new total expected cost. So, you add what you’ve already saved ($50) to the new amount you think you need ($180). Your EAC is now $230.

 In short:

• ETC is like the extra money you think you need to save because the bike’s price increased.
• EAC is your total savings goal after considering the price increase.

So, ETC helps you figure out how much more you need, while EAC tells you the total amount you’ll spend or save up by the end.

How They are Similar?

• Both are estimates: They are forecasts of future project costs, not guaranteed figures.
• Both rely on past data: They incorporate the actual costs incurred so far (AC) to provide insights into future spending.
• Both are crucial for project success: Understanding both ETC and EAC in project management helps you manage resources effectively, anticipate potential budget issues, and ultimately deliver projects on budget.

What Should You Choose Between ETC and EAC?

You don't actually choose between ETC and EAC! They serve different purposes at different stages of your project. Here's how to think about it:

• Start of Project: Use EAC to set a high-level budget based on the total project cost (BAC).
• Mid-Project: Use ETC to control your budget by estimating the additional funds needed to finish remaining tasks.

Conclusion

Both ETC and EAC are indispensable tools in the arsenal of a project manager. While ETC helps in forecasting the time required to complete the remaining work, EAC provides a comprehensive estimate of the project’s total duration at any given point. Understanding and effectively utilizing these concepts can significantly enhance the efficiency and predictability of project execution, leading to successful project outcomes. It’s clear that ETC vs EAC are not rivals but helpful tools for managing projects. ETC, which is useful during the project, helps us plan by estimating the cost of unfinished tasks. On the other hand, EAC, which is useful from the start of the project, gives us a complete view, helping us anticipate if we might go over budget. Remember, you don’t have to choose between them; they each have their own role at different stages. Start with EAC to set a broad budget, and then use ETC in the middle of the project for more precise budget control. Enhance your understanding of project management concepts, including ETC and EAC, with KnowledgeHut's Project Management training and certification.