Project Cost
Cost to Complete: will the money last to the end of the project
Sixty per cent of budget spent does not mean forty per cent left to spend. How the final cost forecast is built, and why without it a decision to inject more funding is taken blind.
The most common error in construction cost control is to treat the share of budget spent as a statement about what remains. The logic looks obvious: if six of ten billion is spent, four is left. But that arithmetic holds under one condition — that the remaining work will be executed at the rates and quantities assumed in the budget. On a project already behind schedule, that condition almost never holds.
What Cost to Complete is
Cost to Complete (CTC) forecasts the expenditure still required to finish the project, calculated from actual status. Added to sunk cost it produces the final cost forecast, known internationally as Estimate at Completion (EAC).
The formula is simple: EAC = actual cost + Cost to Complete. All the difficulty lies in the second term.
What Cost to Complete is made of
- The cost of outstanding quantities under awarded contracts — at actual contract prices, not budget rates.
- The cost of work not yet contracted — at current market rates, not rates set two years ago.
- Approved changes not yet reflected in the budget: additional works already decided but not re-budgeted.
- Expected changes with high probability: items not yet decided but technically inevitable.
- The cost of extending the project: time-related cost — site establishment, the management team, plant hire, financing charges.
- Contingency for residual risk, tied to the risk register rather than set as a percentage.
The fifth item is the most underestimated. On a six-month delay, time-related costs can produce an increase comparable to the value of the construction works that caused the delay in the first place.
Why a lender needs CTC specifically
A lender asks one question: is the committed facility sufficient for the project to be completed and start generating cash. The answer comes from comparing CTC with the undrawn balance — not from a percentage of budget spent.
That is why in lender's monitoring practice the CTC calculation forms part of an independent party's monthly opinion: a borrower assessing the sufficiency of its own funding sits in an obvious conflict of interest.
The signature of an unreliable CTC
| Symptom | What it means |
|---|---|
| CTC equals budget minus spend | No calculation was performed; an arithmetic difference was taken |
| CTC unchanged for several months | The forecast is not being updated against actual status |
| Time-related cost omitted | Extending the project is treated as free |
| Contingency set as a percentage | Contingency is not linked to the risk register |
| Approved changes omitted | Known cost growth is absent from the forecast |
How to test your own CTC in fifteen minutes
Three questions for whoever owns project cost:
- At what prices are outstanding quantities valued — budget rates, or the actual prices in awarded contracts?
- Does the forecast include project extension, and if so, how much of it is time-related cost?
- How was the contingency figure derived, and which risk register entries does it correspond to?
If none of the three receives a specific, numerical answer, the project does not in practice have a final cost forecast.
Related service
Project Controls
Schedule, cost, progress and forecast: a defensible project status every month.