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Estimated Cost at Completion: Definition and Meaning
Definition
Estimated cost at completion is the total estimated cost of a project when completed. It is often calculated as costs incurred to date plus estimated cost to complete.
Why It Matters
For contractors, this estimate is a key input in evaluating project profitability, identifying gross-profit fade or gain, preparing work-in-progress schedules, and making operating decisions. The estimate should be updated as project conditions change.
Reliable estimates require current information from operations, project management, estimating, purchasing, and accounting. Delayed or inaccurate cost-to-complete estimates can reduce the usefulness of project reporting.
Example
A project has incurred $500,000 in costs and is expected to require another $200,000 to finish. Its estimated cost at completion is $700,000.
Related Terms
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