Estimate at Completion vs. Cost to Complete: How GCs Forecast Job Profit
Profit isn’t decided when you sign the contract. It’s decided month by month, by how honestly your team forecasts what’s left to spend.
Most jobs that lose money don’t lose it all at once. They lose it in forecasts nobody updated.
So, what is estimate at completion? Estimate at completion (EAC) is the projected total cost of a job once all work is done: what you’ve spent so far plus your cost to complete (CTC), the forecast of everything left to spend. Compare EAC to your contract value, and you know your projected profit today, not at closeout.
Understanding CTC and EAC
What is cost to complete (CTC)?
Cost to complete is the forecast of every dollar still needed to finish the job. Outside construction, the same number is called estimate to complete (ETC).
For a GC, CTC isn’t one number pulled from thin air. It’s built from:
- Remaining subcontract commitments: what you still owe subs on signed contracts.
- Open purchase orders: materials ordered but not yet invoiced.
- Self-perform labor and equipment: your forecast for your own crews.
- General conditions: supervision, trailers, and other site costs through the end of the job.
- Pending change order exposure: changes you’ll likely absorb or pass through.
CTC = remaining commitments + open POs + remaining self-perform + remaining general conditions + pending change exposure
What is estimate at completion (EAC)?
EAC is your projected total cost at the end of the job.
EAC = actual cost to date + cost to complete
Projected profit = contract value − EAC
ETC vs. EAC vs. BAC
| Metric | What it measures | Question it answers |
|---|---|---|
| Budget at completion (BAC) | Your original cost budget | What did we plan to spend? |
| Cost to complete (CTC or ETC) | Remaining cost | How much more will we spend? |
| Estimate at completion (EAC) | Total projected cost | What will this job cost when it’s done? |
BAC is fixed, unless an approved change revises it. CTC and EAC should move every month as the job changes.
The need: how margin disappears in a forecast
Here’s a job with a $1,100,000 contract, a $1,000,000 cost budget, and $600,000 spent to date. Three people give you three different answers about where it stands:
| Forecast method | Remaining cost | EAC | Projected profit | Margin |
|---|---|---|---|---|
| Budget minus cost to date | $400,000 | $1,000,000 | $100,000 | 9.1% |
| Last month’s CTC | $350,000 | $950,000 | $150,000 | 13.6% |
| Updated field CTC | $470,000 | $1,070,000 | $30,000 | 2.7% |
That updated field CTC came from the people closest to the work. Here’s how it breaks down:
- $280,000 in remaining sub commitments
- $60,000 in open POs
- $90,000 in self-perform labor, because framing is running slow
- $40,000 in exposure from a steel change order still in negotiation
$280,000 + $60,000 + $90,000 + $40,000 = $470,000
The first method is the most common and the most dangerous. “Budget minus cost to date” assumes the rest of the job goes exactly to plan. Last month’s forecast looks even better, and it’s already out of date. Only the updated forecast shows that the job’s margin has collapsed from 13.6% to 2.7%.
The difference is $120,000 in profit. It’s still recoverable if you see it in month six. By closeout, it’s gone.
Why the textbook EAC formula falls short in construction
Most project management guides lead with the earned value formula:
EAC = BAC ÷ CPI, where the cost performance index (CPI) = earned value ÷ actual cost
On the same job, if you’re 55% complete, earned value is 55% × $1,000,000 = $550,000. That makes CPI = $550,000 ÷ $600,000 = 0.917, so EAC = $1,000,000 ÷ 0.917 ≈ $1,090,909.
That’s a useful warning sign, but it assumes the rest of the job will run at the same efficiency as the first half. Construction costs don’t work that way. Sub costs are locked into contracts, material prices move, and a single change order can swing the number. That’s why most GCs use the bottom-up method: actual cost plus a CTC built line by line.
Common forecasting mistakes GCs make
Updating forecasts only at month-end
On a fast-moving job, a month is long enough for a problem to become a loss. Review CTC at least monthly, and weekly on jobs that are at risk.
Leaving the field out
Your super knows framing is running slow before the cost reports show it. Forecasts built only from accounting data are always a month behind. Better communication between project managers and superintendents closes that gap.
Ignoring pending changes
If a change order is likely but not yet approved, its cost belongs in your CTC now. Many start upstream. Here’s how submittals lead to change orders.
Forecasting apart from the schedule
A two-week delay adds general conditions cost whether anyone forecasts it or not. Bulletproof construction scheduling and cost forecasting should use the same timeline.
The solution: a monthly CTC and EAC process that holds up
- Start from committed costs.
Pull remaining balances on every subcontract and open PO. Signed commitments set most of your CTC once the job is bought out, so solid buyout pays off here. - Forecast what isn’t committed, line by line.
Have the PM and super estimate remaining self-perform labor, equipment, and general conditions for each cost code, based on field progress rather than the original budget. - Add pending change exposure.
Include every change order in negotiation at its likely cost, not zero. - Calculate EAC and projected profit.
EAC = actual cost to date + CTC. Projected profit = contract value − EAC. Compare both to last month’s numbers. - Explain every change.
If projected profit dropped $120,000 since last month, the PM should be able to say exactly where it went. - Feed it into your WIP report.
Your EAC drives percent complete and over/under billings on your work in progress (WIP) report. A bad forecast means a bad WIP report, and your surety and lender read both.
This process only works if the numbers are current. That’s where most GCs hit a wall. Commitments are in one system, actual costs are in accounting, change orders are in email, and the field forecast is in the super’s head. Someone rebuilds the picture in a spreadsheet every month, and by the time it’s done, it’s already stale.
Construction project management software fixes that by keeping budgets, commitments, change orders, and actual costs in one place. Construction job costing is the foundation. When costs post against the same cost codes you forecast against, CTC becomes a review, not a rebuild.
Why GCs forecast job profit in RedTeam
RedTeam is construction management software built for general contractors, by people who came from the jobsite. For over 20 years, small to mid-sized GCs have used RedTeam to simplify, automate, and standardize their work from precon through closeout, and construction financial management sits at the center of it.
With RedTeam, your team can:
- See budgets, commitments, change orders, and actual costs together, so building a CTC starts from real numbers instead of a blank spreadsheet.
- Track job costs by cost code as subcontracts, POs, and invoices post.
- Connect the schedule to the budget, so a delay shows up in cost before it shows up at closeout.
- Bring field input into the forecast, with daily logs and project documents from the jobsite in the same platform.
- Carry accurate numbers into billing, from your schedule of values to closeout.
Unlike enterprise construction software, every RedTeam customer gets full software functionality and a dedicated implementation and customer success team. You’re not buying a login. You’re getting a team that helps you set up your cost codes, workflows, and reports the way your company runs.
The GCs that protect margin aren’t the ones with the best estimates. They’re the ones who know where every job stands today. Compare your options in our guide to the best construction management software.
That’s total project control. That’s RedTeam.
See every job’s projected profit before closeout
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