{"id":102218,"date":"2018-02-28T00:00:00","date_gmt":"2018-02-28T05:00:00","guid":{"rendered":"https:\/\/sisn.com\/importance-estimating-project-cost-completion\/"},"modified":"2018-02-28T00:00:00","modified_gmt":"2018-02-28T05:00:00","slug":"importance-estimating-project-cost-completion","status":"publish","type":"post","link":"https:\/\/sisn.com\/en-gb\/importance-estimating-project-cost-completion\/","title":{"rendered":"The Importance of Estimating Project Cost at Completion"},"content":{"rendered":"\t\t<div data-elementor-type=\"wp-post\" data-elementor-id=\"102218\" class=\"elementor elementor-102218 elementor-100463\" data-elementor-post-type=\"post\">\n\t\t\t\t<div class=\"elementor-element elementor-element-4ee43d0b e-flex e-con-boxed e-con e-parent\" data-id=\"4ee43d0b\" data-element_type=\"container\" data-e-type=\"container\">\n\t\t\t\t\t<div class=\"e-con-inner\">\n\t\t\t\t<div class=\"elementor-element elementor-element-73cd0ff8 elementor-widget elementor-widget-text-editor\" data-id=\"73cd0ff8\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t<div class=\"elementor-widget-container\">\n\t\t\t\t\t\t\t\t\t<h1 class=\"underline\">The Importance of Estimating Project Cost at Completion<\/h1><div id=\"post-9696\" class=\"post\"><div class=\"article\"><p><img fetchpriority=\"high\" class=\"aligncenter size-full wp-image-1107\" src=\"https:\/\/sisn.com\/wp-content\/uploads\/2025\/01\/project-costs-management-845x321-1.jpg\" alt=\"\" width=\"600\" height=\"228\" \/>A critical process in most organizations executing Fixed Fee or Lump Sum Projects is the periodic revision of Estimated Costs at Completion. Other terms used include Forecast of Project Costs,\u00a0<a href=\"http:\/\/sisn.com\/project-cost-management\/\">EAC<\/a>\u00a0(Estimate at Completion process), ECAC (Estimated Cost at Completion process) and Cost to Complete process. The goal is to estimate the cost of the project at completion. As a business practice, this primarily applies to fixed fee projects that may span multiple financial periods.<\/p><p><strong>So, the question is, why is this a critical process?<\/strong><\/p><p>The reasons include operational and financial compliance. From a financial compliance perspective, GAAP requires that margin for Fixed Fee Projects be booked based on percentage of completion on a cost to cost basis. Percentage of completion cannot be determined unless the Project Cost at Completion is reasonably accurate and therefore the need to re-estimate the cost at completion. Other than pure compliance, of more significant importance, is visibility and management of margin variance.\u00a0 This is because the actual margin for a project is unknown until the project has been completed and closed. Surprises at the end of the project resulting in reversal of prior period income are the worst kind.<\/p><p>From an operational perspective, there is substantial benefit when the estimates can revised on demand because of the visibility it provides to the Project Manager. The best way to create and manage estimates is by tracking and reporting variances by Cost Category by Task, Phase or Cost Code. Not only does it allow ongoing management of variances, but it can provide feedback to the organization to determine and understand trends and behavior across projects by Task and allow estimating these properly for risk.<\/p><p>Very simply, lack of a defined ECAC process, can negatively impact financial compliance and introduce unnecessary risk in Project based Organizations executing Fixed Fee Projects.<\/p><p>Please call us for a deeper understanding of how\u00a0<a href=\"http:\/\/sisn.com\/microsoft-dynamics-ax\/\">Dynamics AX<\/a>\u00a0and\u00a0<a href=\"http:\/\/sisn.com\/project-cost-management\/\">SIS PCM<\/a>\u00a0can facilitate this process for your organization.<\/p><\/div><\/div>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>The Importance of Estimating Project Cost at Completion A critical process in most organizations executing Fixed Fee or Lump Sum Projects is the periodic revision of Estimated Costs at Completion. Other terms used include Forecast of Project Costs,\u00a0EAC\u00a0(Estimate at Completion process), ECAC (Estimated Cost at Completion process) and Cost to Complete process. The goal is&hellip;<\/p>\n","protected":false},"author":1,"featured_media":102189,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[380,384],"tags":[],"class_list":["post-102218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog-en-gb","category-d365-en-gb"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.5 (Yoast SEO v27.3) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>The Importance of Estimating Project Cost at Completion | Construction ERP<\/title>\n<meta name=\"description\" content=\"SIS is the leading provider of Microsoft Dynamics 365 Enterprise Resource Planning (ERP), Project Management, and accounting solutions for contractors and professional service companies.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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