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Cost to Complete: Definition and Meaning
Definition
Cost to complete is an estimate of the additional cost required to finish a project or contract.
Why It Matters
For construction companies, current cost-to-complete estimates are important to job profitability, work-in-progress reporting, cash-flow planning, and project management. Estimates should be reviewed regularly as labor, materials, productivity, scope, scheduling, and subcontractor conditions change.
A cost-to-complete estimate is only as useful as the data and assumptions behind it. Communication among project managers, estimators, operations personnel, and accounting staff is essential.
Example
A project has incurred $500,000 in costs and is estimated to need another $200,000 to finish. The $200,000 is the estimated cost to complete.
Related Terms
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