What’s the Difference between Estimate-to-Complete and Forecast-to-Complete
Predicting the future is what we’re all about. But when do you use ETC versus FTC – and what’s the difference? Everyone gets nervous when they’re in the dark with how things are going on their project. Collecting real-time information on activities and costs is a big piece of the “Where are we at?” questions, but how do you take that data and leverage it to answer the “Where are we going…” questions? Forecasting the near future and long-term outcomes on projects is a critical function for project controls professionals. To accomplish this, it’s important to first understand the two main methods for preparing and calculating a forecast: Using historical performance indicators Manual predictions of remaining effort Notice that I didn’t include “Remaining Budget” as a forecasting metric. And that’s because, simply taking total project budget and subtracting costs-to-date, does not provide a reasonable forecast. It doesn’t take into consideration any new information or productivity challenges that can significantly influence the remainder of the project. To dive deeper into these two forecasting methods, let’s drill-down into each of these to understand the difference. Performance-based Forecast – ETC Performance-based forecasts are the standard Earned Value method. It takes the historical project performance and determines a productivity ratio based on that performance (CPI). It then uses that ratio to calculate how the rest of the project will play-out if you continue to perform at that level. So, if you’ve been under-performing, you’ll end up over budget and behind schedule if you continue at that pace. And vice versa. It’s a bit like how your car’s computer calculates remaining distance. If you have a reasonably new car, it’ll have screens on the dashboard showing