Project Cost Forecast at Completion

A project has spent half its original budget but only completed a third of its planned work, so the remaining cost may exceed the amount left in the budget. Project cost forecast at completion estimates what the whole project will cost using actual spending and a defensible estimate of remaining work.

PMI explains how earned value can inform project forecasts, and AACE publishes a recommended practice on estimate at completion methods. The references show several approaches, not one formula that fits every project, so management should state assumptions and reconcile the forecast to approved scope.

Define the scope baseline by knowing which deliverables and approved changes are included, since a forecast cannot be compared fairly with a budget for different work. Record actual cost using incurred cost, accruals and committed amounts consistently, because an unpaid invoice can still represent work already done.

Estimate remaining work by asking the people responsible for delivery to estimate labour, materials, subcontractors and risks rather than simply using budget minus spend, and use a work breakdown to forecast each major package before summing, since a single percentage complete can hide an expensive unfinished stage. Check physical progress, because money spent is not the same as work earned and milestones, quantities or accepted deliverables should be verified.

Consider earned value if credible baseline data exist, as cost performance can provide a forecast signal, though it is not a substitute for checking changed conditions. Choose a method: actual cost plus bottom-up estimate to complete is intuitive when the remaining work can be re-estimated, while other formulaic methods need explicit assumptions.

Review commitments, since purchase orders and signed subcontracts can shape future costs and their prices and quantities should be checked for validity, and add known changes, because approved scope changes may increase the budget baseline and forecast while proposed changes stay separate until authorized. Assess pending claims by showing scenarios rather than burying an uncertain amount as certain, since supplier disputes and variation requests can create risk.

Test productivity, because a project running slower than planned may continue at that rate unless a credible improvement plan exists, and check inflation, since materials, wages and freight may change before remaining purchases are made, so use current quotes where possible. Review schedule effects, as delays can add site overhead, equipment hire and management time, and separate contingency by showing identified risks and remaining contingency under the applicable policy without double counting the same risk in each work package.

Consider rework, since defects and rejected deliverables can make reported completion misleading, and use scenario ranges, because a single number conceals risk when scope or productivity is uncertain. Explain variance at completion as forecast final cost minus current approved budget, which shows the expected overrun or underrun under the same scope, avoid percentage optimism because saying a project is 90% done for months can hide difficult commissioning or handover tasks, and reconcile periods against last month's estimate, including actuals and changed assumptions, to show what moved.

Tie the forecast to cash, since cost at completion is not payment timing and a dated cash forecast is needed for funding and drawdowns, consult engineers, schedulers, contractors and finance who hold different evidence, and refresh at milestones because a forecast becomes stale when scope, schedule or market conditions change. Protect governance, since a forecast of an overrun does not itself approve extra spending or a change order, avoid hiding bad news because early visibility gives owners time to redesign, secure funding or change scope, and remember that for an owner an at-completion forecast is the current best estimate of total delivery cost, whose value is honest detail about unfinished work and risk.