TCPI

To Complete Performance Index (TCPI) in EVM

What is TCPI in Project Management?

TCPI is the calculated Cost Performance Index that is achieved on the remaining work to meet the specified management goal, such as the BAC or the EAC. according to the PMBOK Guide

TCPI can also be compared to the Cost Performance Index ( CPI). This may provide additional performance information. For example, if the TCPI is greater than the current CPI, then future efficiency needs to be enhanced if the project is to achieve the BAC or EAC.

The To Complete Performance Index is the estimation of the future cost performance that you will need to complete the project within the approved budget. This budget could be your original approved budget (BAC), or a newly calculated on (Estimate at Completion).

TCPI Formulas

The generic formula to calculate the TCPI is by dividing the remaining work by the remaining funds.

TCPI = (Remaining Work) / (Remaining Funds)

1.TCPI BAC Formula

If the project has to be completed within the original budget (BAC), then the TCPI equation will be:

TCPIB = (BAC – EV) / (BAC – AC)

2.TCPI EAC Formula

If the project has to be completed within the revised budget (EAC), then we can replace total project budget in the Generic Equation with EAC.

TCPIE = (BAC – EV) / (EAC – AC)

TCPI Analysis

  • TCPI < 1 – it means that the project has more funds and less work. It is easier to complete the project.
  • TCPI = 1 – it means that the project has just enough funds to complete the work.
  • TCPI > 1 – it means that the project has less funds and more work. Then it’s difficult to complete the project.
  • CPI is the past cost performance of the project while TCPI is the future cost performance of the project.
  • You will calculate the TCPI based on the BAC if the project is under budget.
  • You will calculate the TCPI based on the EAC if the project is over budget.
  • If the To Complete Performance Index is less than one, you are in a good position.
  • You have to perform with a better cost-performance (CPI) than the past cost performance if the To Complete Performance Index is greater than one. You can continue with the same cost-performance if the To Complete Performance Index is equal to one.

TCPI Examples

Example #01:

Project XYZ to be completed in 24 months. The BAC of project XYZ is 400,000 USD. 12 months have passed, you have spent 220,000 USD, and 60% of the work has been completed.

Calculate the To Complete Performance Index (TCPI) for project XYZ.

Given:

Budget at Completion (BAC) = 400,000 USD

Actual Cost (AC) =220,000 USD

Planned Value (PV) = 50% of 400,000

= 200,000 USD

Earned Value (EV) = 60% of 400,000

= 240,000 USD

Cost Performance Index (CPI) = EV / AC

= 240,000 / 220,000

= 1.1

Since the Cost Performance Index is 1.1, which is greater than one, then the project XYZ is under budget. Therefore, you will use the TCPI formula based on the BAC in this case.

TCPI = (BAC – EV) / (BAC – AC)

= (400,000 – 240,000) / (400,000 – 220,000)

= 160,000 / 180,000

= 0.89

This means that the project can be continued with a Cost Performance Index of 0.89 to complete all the works of the project.

Example #02:

Project XYZ to be completed in 12 months. The budget of the project is 200,000 USD. 6 months have passed, and you have spent 120,000 USD, but on closer examination, you find that only 40% of the work has been completed so far.

Calculate the To Complete Performance Index (TCPI) for this project.

Given:

Budget at Completion (BAC) = 200,000 USD

Actual Cost (AC) = 120,000 USD

Planned Value (PV) = 50% of 200,000

= 100,000 USD

Earned Value (EV) = 40% of 200,000

= 80,000 USD

Cost Performance Index (CPI) = EV / AC

= 80,000 /120,000

= 0.67

Since the Cost Performance Index is less than one, then the project is over budget. Now you have to calculate a new Estimate at Completion and use the TCPI formula based on the EAC.

Estimate at Completion (EAC) = BAC / CPI

= 200,000 / 0.67

= 298,507.46 USD

TCPI = (BAC – EV) / (EAC – AC)

= (200,000 – 80,000) / (298,507.46 – 120,000)

=120,000 / 178,507.46

=0.67

This means that the project can be continued with a Cost Performance Index of 0.67 to complete the project.

See Also

EAC in Earned Value Management

SPI in Earned Value Management