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Use the 20% Rule: Cost-to-Complete Forecasting Template for Trade Subs

September 26, 2026
Use the 20% Rule: Cost-to-Complete Forecasting Template for Trade Subs

The fastest reliable way to forecast cost to complete is to calculate ETC from a current EAC driven by your performance trend, an index-based method, and sanity-check it against TCPI. Use index-based ETC (BAC minus EV, divided by CPI) once your job is at least 20% complete and your cost performance index has held steady for a few periods. Switch to a bottom-up re-estimate the moment the scope changes. Report both ETC (cash you still need) and EAC (total job outturn), and flag any TCPI-to-CPI gap over 0.05.

TL;DR:

  • Use index-based ETC only after at least 20% of the job is complete and the cost performance index has stabilized over several periods; switch to bottom-up estimates when scope changes.
  • Regularly compare TCPI to CPI, and avoid trusting the index-based forecast if the gap exceeds 0.05, indicating a need for re-estimate.
  • Keep three key data points updated weekly: actual costs by code, earned value by quantities, and change order status to maintain forecast accuracy.
  • Recognize that broad CPI drops below 0.90 across multiple cost codes signal scope or performance issues requiring bottom-up re-estimation.
  • Present multiple forecast scenarios and trend visuals to owners and finance, emphasizing ETC, EAC, and recent CPI trends for better decision-making.
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Table of Contents

What Is Cost-to-Complete Forecasting and Why Does It Matter for Subs?

Cost-to-complete forecasting is the practice of predicting how much money a job will still need before it wraps, based on how it has actually performed so far, not what the original budget assumed. The technical term for that remaining-cost number is Estimate to Complete, or ETC. Add ETC to what you've already spent and you get Estimate at Completion, or EAC, the total the job is projected to cost from start to finish.

A handful of terms drive every calculation in this article, so get comfortable with them now:

  • AC (Actual Cost): what you've actually spent to date on labor, material, and subs.
  • EV (Earned Value): the budgeted value of the work you've actually completed, not the work you've billed.
  • BAC (Budget at Completion): your original total contract budget.
  • VAC (Variance at Completion): BAC minus EAC, the dollar gap between what you planned and what you now expect.
  • ETC: the forecasted cost remaining.
  • EAC: AC plus ETC, the projected final cost.

A static budget is a snapshot from bid day. A live forecast is a moving picture that updates every time labor hours post or a change order lands. That distinction is where job profitability actually gets decided.

For a specialty trade sub, ETC drives three things directly. It tells you how much cash you'll need to draw before the job closes, which matters more than most owners realize when float is thin. It flags change orders that need pricing before they eat your margin quietly. And it's the only honest way to know, mid-job, whether you're making money or just billing your way toward a loss.

Core Metrics and Formulas: CPI, SPI, EAC, and TCPI

Two ratios anchor everything else in earned value management. Cost Performance Index (CPI) equals EV divided by AC. A CPI of 0.90 means you're getting 90 cents of earned value for every dollar spent, a cost overrun in progress. Schedule Performance Index (SPI) equals EV divided by Planned Value (PV), and it tells you whether you're ahead or behind schedule, independent of cost.

From CPI, you can build four different EAC forecasts, each valid under different conditions:

  1. EAC = BAC / CPI. The simplest index-based formula. Assumes your current cost trend continues for the rest of the job at the same rate.
  2. EAC = AC + (BAC − EV). Assumes the remaining work will be done at the original budgeted rate, ignoring any overrun so far. Rarely realistic once a job is troubled, but useful as an optimistic baseline.
  3. EAC = AC + (BAC − EV) / (CPI × SPI). Factors in both cost and schedule performance, a sharper forecast when a job is both over budget and behind.
  4. EAC = AC + bottom-up ETC. Built from a fresh, line-by-line re-estimate of remaining scope. The most accurate when conditions have genuinely changed, and the most labor-intensive.

Practical templates confirm the standard approach here: index-based ETC divides remaining budget by CPI, and presenting more than one EAC scenario gives owners and finance teams a defensible range instead of a single guess, according to worked cost-to-complete examples.

To-Complete Performance Index (TCPI) answers a different question: what cost performance do you need from this point forward to still hit BAC? TCPI = (BAC − EV) / (BAC − AC). Compare it to your current CPI. DOE guidance on earned value forecasting treats the gap between TCPI and CPI as a built-in reality check: if TCPI runs more than 0.05 above your current CPI, hitting original budget would require a performance jump that almost never happens on a real job site. That gap is your earliest warning that the forecast, not just the job, needs attention.

Which Forecasting Method Should You Actually Use?

Picking the right method matters more than getting the math exactly right, because the wrong method on good data still gives you a bad answer.

  • Index-based (BAC/CPI): Fast, requires no new estimating work, and reliable once you're past roughly 20% complete with a CPI that has held steady for two or three reporting periods. Cumulative CPI tends to stabilize around that 15 to 20 percent completion mark, which is why forecasting before that point is guesswork dressed up as math.
  • Bottom-up re-estimate: Slower, but mandatory once scope has changed, allowances get replaced with real numbers, or your early-stage data is too thin to trust a ratio. This is the method a change order or a scope dispute forces on you, whether you want it or not.
  • Straight-line/trend or rolling CPI: Good for a quick gut check between formal updates, not a replacement for full EVM when real money is on the line. Treat trend lines as a smoke detector, not a fire report.

When uncertainty is real, uncertain quantities, unpriced change orders, a crew that just changed, don't hand the owner one number. Present a range: your optimistic EAC, your index-based EAC, and your bottom-up EAC if scope has shifted. GAO's cost-estimating guidance backs this directly, calling for risk-based analysis rather than a single point estimate whenever a project carries real cost risk.

Pro Tip: If your CPI has bounced by more than 0.05 in either direction over the last two reporting periods, don't trust an index-based EAC yet. Wait one more cycle or go bottom-up instead.

How Do You Build an ETC/EAC Forecast Step by Step?

Getting a defensible ETC out of your job records isn't complicated, but it does require the right inputs in the right order.

  1. Pull your data inputs. You need actual cost by cost code, earned value by quantity or bill-of-quantities completion, open purchase orders, committed but unbilled labor, pending change orders, and current field time records.
  2. Validate before you calculate. Stale AC or EV numbers, time cards that haven't posted, invoices sitting in a drawer, make every downstream formula wrong. Fix the data before you touch the math.
  3. Pick your method. Index-based if the job is mature and CPI is stable. Bottom-up if scope moved or the job is still early.
  4. Calculate ETC and EAC, then run TCPI as your sanity check.
  5. Run a quick sensitivity check. What happens to EAC if CPI drops another 0.05? If a pending change order doesn't get approved?
  6. Document your assumptions. Which formula you used, what data date it reflects, and why. Six months from now, you'll want to know why a number changed.

On cadence: fast-moving trades like electrical rough-in on a multi-crew job or drywall on a tight schedule should update ETC weekly. Everyone else should treat monthly as the floor, not the target. Owners and GC finance departments generally expect at least a monthly EAC update on any job with active change order activity, and DOE's guidance on ETC development reinforces starting each update from a validated remaining-work estimate rather than recycling last period's assumptions. Keeping AC and EV current between updates is its own discipline. Tracking budget versus actuals weekly is what makes the monthly forecast trustworthy instead of stale.

A Worked Example: Electrical, Plumbing, and What to Put in Your Template

Here's a simple index-based walkthrough for an electrical rough-in package. BAC is $180,000. At the current reporting date, AC is $95,000 and EV is $90,000.

That $10,000 negative variance is the number that should trigger a conversation with the owner before the job closes, not after.

Now take a plumbing job where fixture allowances get replaced with actual selections mid-job. An index-based ETC would miss that shift entirely because it's driven by past cost performance, not future scope. A bottom-up re-estimate, pricing out the actual fixtures against the remaining rough-in and trim labor, is the only method that captures a scope change like that correctly.

For your own template, keep three fields updated every reporting period without fail: AC by cost code, EV by percent-complete or quantity installed, and any change order status. Those three inputs feed every formula above, and finance will almost always care about ETC and EAC more than any of the intermediate ratios.

Three cost inputs feeding forecast formulas

What Mistakes Make a Forecast Unreliable?

The single most common error: treating whatever's left in the budget as your ETC without checking whether current performance supports it. If CPI is 0.85 and you're still forecasting completion at the original budgeted rate, you're not forecasting, you're hoping.

Watch for these red flags:

  • A TCPI-to-CPI gap wider than 0.05, your earliest sign the forecast needs a re-plan.
  • AC or EV that hasn't moved in two reporting cycles, a data problem masquerading as stability.
  • A stack of unpriced change orders sitting outside the forecast entirely.

Fix it by forcing a bottom-up re-estimate on the affected cost codes, running a quick sensitivity check on your worst assumption, and tightening how contingency gets drawn down. GAO's guidance is blunt about this last point: contingency is a managed risk reserve, not a slush fund to absorb sloppy estimating.

Pro Tip: If three or more cost codes show a CPI below 0.90 at the same time, stop trusting the index-based EAC for the whole job and re-estimate bottom-up. A trend that broad usually means something changed at the project level, not the cost-code level.

What Mistakes Make a Forecast Unreliable? — overview diagram

How Do You Present ETC and EAC to Finance and Owners?

Lead with ETC, the cash still required, and EAC, the total projected outturn. Show the CPI trend over the last three periods, not just the current snapshot, and end with a one-line action plan.

  • Present three EAC scenarios (optimistic, index-based, bottom-up) and name which formula produced each one.
  • Use an S-curve chart plotting PV, EV, and AC together, it shows drift faster than any table.
  • Add a two-column table comparing this period's numbers to last period's so the trend, not just the snapshot, is visible.

Owners and GC finance teams read trend lines faster than formulas. Give them both.

A Field-Tested Checklist for Trade Subs

Three habits separate subs who forecast accurately from those who guess. Capture time daily, not weekly, so labor cost never lags reality by more than a day. Review open POs and unbilled invoices weekly so AC stays current. Update EV monthly at minimum, tied to actual quantities installed, not percentage estimates from memory.

For the setup work behind all three, see job costing setup for small trade firms and common electrical job costing mistakes, both built around the same cost-code discipline this article assumes.

Forecasting Works Better as a Habit Than an Event

Most subs treat cost-to-complete forecasting like a year-end chore, something you do when the accountant asks. That's backwards. The subs who catch a losing job in week three instead of week twelve are the ones running the same three or four data checks every single week, without exception, whether the job looks fine or not.

The value isn't the formula. Any estimator can plug numbers into CPI. The value is catching a 0.90 CPI in week three instead of discovering it at closeout, when the only options left are absorbing the loss or fighting for a change order you should have priced two months earlier.

— Dave

How Subascent Keeps Your Forecasts Current

Every formula in this article depends on one thing: current, accurate field data. That's the part most subs struggle with, not the math. The software is designed for specialty trade subcontractors to help close that gap. It captures field time and daily progress through a mobile app, syncs with QuickBooks so AC stays current, and tracks quantities and earned value against the original bid so CPI is based on real numbers, not estimates.

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That combination, field data, job costing, and QuickBooks in one place, is what turns a once-a-quarter forecast into a weekly habit you can actually keep. If you're tired of rebuilding your ETC in a spreadsheet every reporting period, see how Subascent's job and bid management platform handles it automatically, and request a demo to see your own job data run through it.

Sources

This article draws on GAO's cost estimating guidance, DOE's PARS II guidance on EAC and TCPI, PMI's research on earned value forecasting, and GAO-20-195G for formulas and risk-analysis practices.

FAQ

What Does Cost Forecasting Mean in Construction?

Cost forecasting means predicting a project's total final cost, EAC, and the money still needed to finish, ETC, based on how the job has actually performed so far rather than the original budget alone. It relies on earned value data (AC, EV, BAC) updated regularly, not a one-time estimate.

What Are the Five Levels of Cost Estimation?

Cost estimating maturity generally moves through five stages: order-of-magnitude (rough conceptual figures), preliminary or budget estimates, definitive or detailed estimates, control estimates used to manage the job, and forecasted estimates like ETC and EAC that update as work progresses. Each level gets more accurate as design and field data mature.

What Are the Seven Steps of Forecasting?

While exact lists vary, a practical version for trade subs runs: gather accurate cost and progress data, validate that data, choose a forecasting method, calculate CPI and SPI, compute ETC and EAC, run a TCPI sanity check, then document assumptions and report. Skipping the validation step is the most common reason forecasts go wrong.

What Are the Seven Types of Cost Tracked in a Job Forecast?

Common cost categories in trade job costing include labor, material, equipment, subcontracted work, overhead, committed but unbilled costs, and contingency. Tracking these separately by cost code is what makes an accurate EV and AC, and therefore an accurate ETC, possible.

How Often Should I Update My Cost-to-Complete Forecast?

Fast-moving trades with multiple crews or tight schedules should update ETC weekly, while monthly is the floor for everyone else, especially on jobs with active change orders. Earned value forecasting for subs works best as a running habit tied to your regular billing cycle, not a one-time exercise.