Are you managing a project, be it in compliance, risk, technology or even construction? It can be overwhelming and challenging to manage the budget given all the information required. As the project manager, you are likely at the center of it all with clients, stakeholders, management, and the team all looking to you to provide transparency on the budget so that decisions impacting every aspect of the project can be made quickly.
What is Estimate to Complete?
Simply put, it is the revised total cost of the project to completion when you have already started the project and have incurred time and expenses.
Why do you need an Estimate to Complete?
So that you can project whether you will be over or under budget while you still have the budget and time to do something about overruns or great news about savings (which can mean opportunities to invest resource on building your business).
Oftentimes, as a project manager, you do not really know what you are getting into when starting a new project until you get started. In some cases, a project might take a life of its own. Therefore, it is crucial that you monitor a project’s budget closely and maintain frank conversations with your team and the client. This is where an accurate Estimate to Complete can pay dividends so that you are not left with having blew the budget or delivering subpar work because you ran out of budget.
How do you Calculate Estimate to Complete (ETC)?
There are two key components needed to arrive at the ETC.
- First is the “actual spend to-date”. This includes the total amount of time spent by each of the project team members, plus the total amount of expenses (e.g., hotels, meals, etc.) already incurred for the project.
- Second is the “estimated remaining spend”. This includes the remaining time and expenses required to deliver the project to completion given the agreed-upon project scope and time.
But how often should you have estimates to complete?
Well, consider your run rate to establish how often you will be conducting the progressive project cost forecasting. In other words, the frequency of estimate to complete should be dependent on the amount of money you are spending on the project, and the project’s cash flow situation.
Therefore, they key thing here is to compare the estimates to complete for your project in progress with the original and/or revised budget of the project. Then, assess if you are still with your budget limits.
Be open-minded and remain positive
With the information, you will be able to have clear and frank conversations with your team and client as far as the progress and the cost of the project is concerned. It is good to appreciate the fact that the outcome of your estimate assessment might be good or bad news. However, whichever the case, it is better to know how you are faring sooner than later and have a plan that everybody involved in the project is on board with.