From the course: Project Management Foundations: Budgets
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Budget forecasting
From the course: Project Management Foundations: Budgets
Budget forecasting
- The earned value approach for tracking project status is excellent for forecasting, especially when your project's in the execution phase. By monitoring the status against your plan, you can estimate the money you'll spend when the project is complete. You can also forecast the funds needed from your current point in time to the project conclusion. The total amount of money spent when the project is complete is called Estimate at Completion, or EAC. The money needed to get you from your current point in the project until the end of the project is called Estimate to Complete, or ETC. Let's look at how to calculate these forecast figures. But first, a warning, a bit of math is coming up. We'll step through it slowly and show the formulas on screen. We first need to determine the cost performance index or CPI to produce these forecasts. The CPI equals the earned value. The value of the work you've completed divided by the actual cost, what you've actually spent to complete that work…
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