Estimate-To-Complete, Estimate-At-Completion, etc

dbdoug

I'm studying for the PM division of the architect's licensing exams, and wrestling with the various forecasting techniques for "snapshot" monitoring of the progress of the Project Work Plan:
ETC Estimate-To-Complete
EAC Estimate-At-Completion
EAC Multiplier
Effective Multiplier

Using these metrics involves analyses of how much has been spent on labor to-date, how much is expected to be spent on labor to complete the remainder of the project, how much the total spent on labor at project completion will be, etc. What I don't understand is whether we're always talking about the cost of Direct Labor, or the cost of direct labor with multipliers applied (what I call Factored Labor, as I haven't seen the official term). One of the terms found in equations is NSF Net Service Fee, which is a value that has multipliers applied - it is not a value of direct labor (unless I've badly misinterpreted that). So does that mean that all the terms of the formulas need to be converted to and expressed as labor values with multipliers applied (factored labor)? Terms of direct labor and terms of factored labor don't belong together in the same formula, do they? Summary of my question: are terms of equations for forecasting techniques always in direct labor, or always in factored labor, or a mix of the two?
Dan

Harwinder

Hello Dan,

There's no right or wrong way here. It depends on your project or your organization whether they include the "other" types of costs in the estimates. From project management perspectives, such decisions should be documented in the project management plan.

Let me know whether that answers your question.

dbdoug

It's math, which is unambiguous (hopefully) - there has to be a right and a wrong way. I've decided that the right way is to always analyze the financial progress in terms / units of "factored labor" - with multipliers applied. We're trying to gauge what we're gaining for what we're spending - so what are we spending on? Just direct labor? No, we're also spending on indirect labor and employee benefits and rent and office equipment and all the other stuff that the labor multipliers are supposed to cover, so it makes sense that all the terms and units in formulas for ETC, EAC, EAC Multiplier, and Effective Multiplier would be expressed as "factored labor", with multipliers applied.

Harwinder

There is no ambiguity on the formulas but data or values you feed to those formulas depend upon your project / org.