EAC, ETC and TCPI: Forecasting Final Cost on Construction Projects

What Are EAC, ETC and TCPI?

Three metrics. Three questions. Each one does a different job.

EAC (Estimate at Completion) answers: "What will this project cost when it's finished?" It's your total forecast outturn, from day one through to final account.

ETC (Estimate to Complete) answers: "How much more do we need to spend from today?" It strips out sunk costs and tells you what's left to fund. That's the number finance directors actually care about - not the total, but what's still to come.

TCPI (To-Complete Performance Index) answers: "How efficiently do we need to perform from here to hit our target?" It's a reality check. If TCPI says you need to perform at 1.35 when your CPI has been running at 0.87, you're not hitting that budget.

All three depend on the same base earned value inputs - BAC, EV, AC, PV. Get those wrong and everything downstream is fiction.

EAC: Four Formulas, Four Assumptions

There isn't one EAC formula. There are four, and each one bakes in a different assumption about how the rest of your project will play out. Pick the wrong assumption and you'll get a forecast that's technically correct but practically useless.

Formula 1: EAC = BAC / CPI

Use when: Past cost performance will continue for the remainder of the project.

The workhorse formula. If your CPI has been sitting at 0.91 for four months and nothing structural is changing, this gives you the most reliable forecast. Budget £12M, CPI 0.91: EAC = £12,000,000 / 0.91 = £13,187,000.

When it misleads: early in the project (before month 3-4), CPI is volatile. One bad month skews everything. Don't use this formula until you have at least three months of stable data.

Formula 2: EAC = AC + (BAC - EV)

Use when: The cost variance was a one-off event, and future work will run at the original budgeted rate.

You hit a bad patch - maybe ground conditions on one section, or a subcontract came in higher than priced. It's done now. The rest should run to budget. AC £4.2M, EV £3.8M, BAC £12M: EAC = £4,200,000 + (£12,000,000 - £3,800,000) = £12,400,000. This assumes the remaining £8.2M of work will cost exactly £8.2M - optimistic unless you can genuinely point to the one-off event.

Formula 3: EAC = AC + (BAC - EV) / (CPI x SPI)

Use when: Both cost and schedule performance are affecting remaining work, and both trends will continue.

The most conservative formula. On complex infrastructure jobs, often the most honest. If you're behind programme and over budget, the remaining work doesn't just cost more per unit - you've also got compounding schedule pressure. AC £4.2M, EV £3.8M, BAC £12M, CPI 0.91, SPI 0.85: EAC = £4,200,000 + £8,200,000 / 0.7735 = £14,801,000.

Nobody wants to report that number. But if programme is genuinely slipping and costs are genuinely running over, this is what the board needs to hear.

Formula 4: EAC = AC + Bottom-Up ETC

Use when: Something fundamental has changed. The original budget assumptions no longer apply.

Forget the trend formulas. Get package managers to re-estimate every remaining activity from scratch. Add that to what's already been spent. Used most often after a major scope change, contract acceleration, or when original tender allowances are clearly no longer valid. It takes longer, but every line is defensible.

Which Formula Should You Use?

The honest answer on a large infrastructure job: calculate all four and present a range. Boards don't want a single number - they want to understand the range of outcomes and which scenario is most likely.

ETC: What's Left to Spend

ETC is the forward-looking number. It strips out what's already been spent and tells you what's left.

That's it. Once you have EAC, subtract actual costs. EAC £13,187,000, AC £4,200,000: ETC = £8,987,000.

Simple formula, but in the right conversation, ETC matters more than EAC.

Why ETC Matters More at Board Level

When presenting to a finance director or client's commercial team, ETC is the number that triggers cash flow decisions. EAC tells them the total damage. ETC tells them what's left to fund. Project directors managing a portfolio of 30+ live projects are planning drawdowns and arranging finance. They don't care that the total outturn is £32M. They care that you need another £22.4M from the pot.

ETC Sanity Check

Always cross-check your ETC against the remaining planned value. If ETC is dramatically different from (PV at completion minus PV to date), you need to explain why. Either cost performance has shifted significantly, or the EAC formula is wrong.

TCPI: The Reality Check

TCPI doesn't forecast cost. It tells you how hard you'd have to work to hit a given target. Think of it as a fitness test for your remaining budget - and like most fitness tests, the results can be uncomfortable.

TCPI Against Original Budget

Answers: "What cost performance do I need from here to finish on the original budget?" BAC £12M, EV £3.8M, AC £4.2M: TCPI = £8,200,000 / £7,800,000 = 1.05. A TCPI of 1.05 means delivering every remaining pound of work for 95p. Tight, but achievable if you've identified what went wrong.

TCPI Against Revised EAC

Answers: "What cost performance do I need to hit the revised forecast?" If EAC is £13,187,000: TCPI = £8,200,000 / £8,987,000 = 0.91. A TCPI of 0.91 against the revised EAC means you can perform slightly below current efficiency and still hit the forecast. That's a sign the EAC is realistic - possibly even conservative.

Reading TCPI

Rule of thumb: compare TCPI to your cumulative CPI. If TCPI is more than 0.10 above CPI, the target is unrealistic. You're essentially telling the board you'll suddenly perform 10%+ better than you have done so far. Unless you can point to a specific reason - a problematic subcontract completing, a high-cost phase wrapping up - that's wishful thinking.

Worked Example: £28M Water Treatment Upgrade

Project: Water treatment works upgrade, NEC4 Option C. BAC: £28,000,000. Duration: 24 months. Reporting date: Month 7.

At the end of Month 7, the commercial team reports:

Step 1 - CPI and SPI

CPI = EV / AC = £8,400,000 / £9,600,000 = 0.875
SPI = EV / PV = £8,400,000 / £9,800,000 = 0.857

Both below 1.0. Over budget and behind programme. Ground conditions on the inlet works civils package caused most of the early overrun.

Step 2 - All Four EAC Formulas

That's a spread of £6.5M - from £29.2M to £35.7M. This is why you don't present a single EAC number. The remaining mechanical and electrical work is largely subcontracted at fixed prices, so the most likely outturn sits between the BAC/CPI forecast (£32M) and the bottom-up re-estimate (£31.4M).

Step 3 - ETC

Using EAC = £32,000,000 (the BAC/CPI forecast):
ETC = £32,000,000 - £9,600,000 = £22,400,000

The finance team needs to allocate £22.4M more to complete this project. That's the number that goes into the group cash flow forecast.

Step 4 - TCPI

Against original budget: TCPI = (£28M - £8.4M) / (£28M - £9.6M) = £19,600,000 / £18,400,000 = 1.065

Against revised EAC of £32M: TCPI = (£28M - £8.4M) / (£32M - £9.6M) = £19,600,000 / £22,400,000 = 0.875

TCPI against BAC is 1.065 - you'd need to improve efficiency by nearly 19 percentage points from a CPI of 0.875. That's not happening without a major scope cut. TCPI against the revised EAC is 0.875 - exactly matching current CPI. That's confirmation the BAC/CPI forecast is internally consistent.

Step 5 - Board Summary

"We're forecasting an outturn of £31.4M to £32M, a £3.4M to £4M overrun against the original £28M budget. The primary driver is ground condition issues on the inlet works civils package. The remaining M&E installation is subcontracted at fixed lump sums, limiting further exposure. We need £22.4M to complete. Recovery to the original budget would require a step-change in cost efficiency (TCPI 1.065 against a running CPI of 0.875) which is not realistic without scope reduction."

Reporting EAC, ETC and TCPI to Boards

The metrics are only useful if the audience understands them. Most board members aren't earned value specialists. Present a table of CPI, SPI, TCPI and EAC without context and you'll get blank stares followed by "just tell me the number."

The One-Page Format

What Boards Actually Want to Know

Stop leading with formulas. Lead with answers.

1. "Are we going to overrun?" Yes or no. By how much. How confident are you.
2. "How much more cash do I need?" That's ETC. Give them the number.
3. "Can we recover?" That's TCPI. If TCPI vs BAC is above 1.10, recovery isn't happening without scope reduction or acceleration funding.
4. "What changed since last month?" Show EAC trend over time. A simple S-curve plotting PV, EV and AC tells a clearer story than any table.

If the board responds better to absolute figures than indices, present cost and schedule variances (CV and SV) alongside the forecasts - the pound figures tend to hit harder.

Common Mistakes

1. Using BAC/CPI before 20% completion. CPI is unstable in the early months. One bad mobilisation package can swing it wildly. Use bottom-up ETC until you have enough data for trend formulas to stabilise.
2. Presenting a single EAC number. Commercial directors see through this instantly. They know the forecast is uncertain. Presenting a single figure suggests either naivety or concealment. Show the range, explain which scenario is most likely and why.
3. Not updating ETC when EAC changes. If EAC is revised upward and ETC isn't recalculated, the board is making cash flow decisions on stale numbers.
4. Ignoring TCPI when it screams. A TCPI above 1.20 against BAC means the original budget is gone. Stop trying to recover it. Re-baseline and manage the revised forecast.
5. Confusing EAC and ETC in presentations. The board asks "how much more do we need?" and gets the total outturn. That's EAC. They wanted ETC. It makes commercial teams look unprofessional.
6. Not stating which EAC formula was used. If someone can't see the assumption behind your forecast, they can't challenge it. Always state the formula and the reasoning.

For more forecasting pitfalls, see common EVM mistakes in construction.

Quick Reference Table

For a full project walkthrough showing these metrics in context, see the worked construction example. For the monthly reporting structure, see the earned value report template.