This guide covers everything you need to know about revenue and cost forecasts in PMBOK 8. Revenue and cost forecasts are forward-looking financial projections that estimate the project’s expected costs to complete (ETC) and expected at completion (EAC), and — for revenue-generating projects — the projected income and financial outcomes at project close.
What Are Revenue and Cost Forecasts?
Revenue and cost forecasts are updated financial projections produced during project execution that reflect current performance data, revised assumptions, and the best available estimate of what the project will cost (and earn, for revenue-generating projects) through completion. They differ from the original cost baseline in that they are dynamic — revised regularly to reflect actuals and changing conditions — rather than static references.
The most common cost forecast metrics in project management are the Estimate to Complete (ETC — how much more will the project cost from today to finish?) and the Estimate at Completion (EAC — what is the total projected final cost of the project?). These are calculated using earned value management formulas and updated at each reporting period.
For commercial projects where the project generates revenue (contracts, billable services, product launches), revenue forecasts project when income will be received, at what amounts, and how that revenue compares to the cost profile to determine profitability at completion.
Revenue and Cost Forecasts in PMBOK 8 — Domain and Process
In the PMBOK Guide 8th Edition, revenue and cost forecasts belong to the Finance Performance Domain and are produced during the Monitor and Control Finances process. PMBOK 8 treats financial forecasting as an active management activity, not just a reporting exercise — forecasts inform decisions about corrective action, change requests, and reserve drawdowns.
Revenue and cost forecasts feed into work performance reports (communicating financial status to stakeholders) and can trigger corrective action plans when the EAC exceeds the budget at completion (BAC) beyond acceptable thresholds.
Key Elements of Revenue and Cost Forecasts
Well-structured revenue and cost forecasts typically include:
- Earned Value Metrics — PV, EV, AC, CV, SV, CPI, and SPI for the current period and cumulative
- Estimate to Complete (ETC) — projected remaining cost based on current performance trends
- Estimate at Completion (EAC) — projected total final cost using one of the standard EAC formulas
- Budget at Completion (BAC) — the original approved cost baseline for comparison
- Variance at Completion (VAC) — the projected over or under-spend at project end
- Revenue Forecast (if applicable) — projected income by period and at completion
Revenue and Cost Forecasts Example — Project Phoenix
Alex Morgan produced monthly cost forecasts for Project Phoenix throughout execution. By week 14 (end of April), actuals were: PV = $54,200, EV = $55,800, AC = $53,600. This yielded a CPI of 1.04 (EV/AC) and an SPI of 1.03 (EV/PV) — both favorable. Using the EAC formula EAC = BAC/CPI, Alex projected a final cost of $66,385 / 1.04 = $63,831 — approximately $2,554 under the cost baseline.
The favorable forecast was communicated to Riley Park in the Month 4 financial dashboard, with a note that the project was on track to return approximately $2,500 of the contingency reserve unused. This forecast accuracy proved correct: the final project cost was $68,847 (including the approved CR-001 addition of $3,200), slightly above the mid-project EAC due to additional Sam Lee hours for the go-live weekend, but well within the overall budget of $72,250.
You can download the complete filled-in example below — it shows exactly how revenue and cost forecasts were managed in a real project.
Download Free Revenue and Cost Forecasts Template and Example
We have prepared two free resources to help you build revenue and cost forecasts for your own projects:
- Download the Revenue and Cost Forecasts Template — PMBOK 8 (blank, ready to fill in)
- Download the Revenue and Cost Forecasts Example — Project Phoenix (filled in for a real $72K website launch)
Both are free downloads — no registration required.
Revenue and Cost Forecasts — Best Practices and Common Mistakes
Use multiple EAC formulas (EAC = BAC/CPI, EAC = AC + ETC, EAC = AC + remaining BAC) and compare the results — if they diverge significantly, investigate why. Update forecasts at a consistent frequency (monthly at minimum, biweekly on fast-moving projects) so stakeholders have current information for decisions. Do not suppress unfavorable forecasts — a realistic forecast that shows a cost overrun allows time for corrective action; a whitewashed forecast that hides the problem does not.
The revenue and cost forecasts are most effective when they are based on current actuals and realistic completion assumptions, not optimistic projections designed to minimize management concern. Teams that skip or rush financial forecasting often discover cost overruns too late to take effective corrective action.
Want to master project management with PMBOK 8? The PMBOK Guide 8th Edition is the definitive reference. Get your copy and use it alongside these free resources.
Project Management