To-Complete Performance Index (TCPI) in Project Cost Management

To-Complete Performance Index (TCPI)

The To Complete Performance Index (TCPI) is the third forecasting tool mentioned in the PMBOK Guide. This is a relatively new term which was coined by the PMI to assist project managers in calculating the future cost performance of the project.

Since the concept of TCPI is new and there is not much research available on this topic, it often confuses many people. However, there is some good news for you. Now that I have passed the PMP exam and have a better understanding on this topic, I am writing this blog post to make this concept easier for you.

First I will explain to you the definition, next I will show you a real world example, and then finally I will give you mathematical examples to hit the last nail in the coffin.

Okay let’s get started.

To Complete Performance Index (TCPI)

The To Complete Performance Index (TCPI) gives you the future cost performance index that you must follow for the remaining work if you want to complete it within the given budget.

As per the PMBOK Guide, fifth edition:

“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.”

Put more simply, the To Complete Performance Index (TCPI) is the estimate of the future cost performance that you may need to complete the project within the approved budget. This budget may be your initial approved budget (BAC), or a newly calculated budget (EAC).

You can calculate the TCPI by dividing the remaining work by the remaining funds; i.e.

TCPI = (Remaining Work)/(Remaining Funds)

You can calculate the remaining work by subtracting the earned value from the total budget; i.e. (BAC – EV). However, there are two cases to determine the remaining funds on hand. In the first case, you determine the remaining funds when you are under budget and in the second case when you are over budget.

So in these cases, the formula to calculate the To Complete Performance Index (TCPI) formula will be different.

Let us discuss these two cases in detail.

Case-I: You’re Under Budget

In this case, the remaining funds will be calculated by subtracting the “actual cost incurred to date” from the “initial budget”; i.e. (BAC – AC).

Here, the TCPI formula will be:

TCPI = (BAC – EV)/(BAC – AC)

Example of TCPI: Case-I

You are working on a project to be completed in 24 months and the total cost of the project is 200,000 USD. Twelve months have passed and 110,000 USD has been spent, and 60% of the work has been completed so far.

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

Given in the question:

Budget at Completion (BAC) = 200,000 USD

Actual Cost (AC) = 110,000 USD

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

= 100,000 USD

Earned Value (EV) = 60% of 200,000

= 120,000 USD

Cost Performance Index (CPI) = EV / AC

= 120,000 /110,000

= 1.1

Since the cost performance index is 1.1, which is greater than one, you are under budget. Therefore, in this case you will use the TCPI formula based on the BAC.

Hence,

TCPI = (BAC – EV)/(BAC – AC)

= (200,000 – 120,000)/(200,000 – 110,000)

= 80,000/90,000

= 0.89

This means that you can continue with a Cost Performance Index of 0.89 to complete the project.

Case-II: You’re Over Budget

In this case, the remaining funds will be calculated by subtracting the actual cost incurred to date from the estimate at completion; i.e.  (EAC – AC).

Here, the TCPI will show you the required cost performance to complete the project with the newly calculated budget.

TCPI = (BAC – EV)/(EAC – AC)

Example of TCPI: Case-II

You have a project to be completed in 12 months and the total cost of the project is 100,000 USD. Six months have passed and 60,000 USD has been spent, but on closer examination you find that only 40% of the work has been completed so far.

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

Given in the question:

Budget at Completion (BAC) = 100,000 USD

Actual Cost (AC) = 60,000 USD

Planned Value (PV) = 50% of 100,000

= 50,000 USD

Earned Value (EV) = 40% of 100,000

= 40,000 USD

Cost Performance Index (CPI) = EV / AC

= 40,000 /60,000

= 0.67

Hence, the Cost Performance Index (CPI) = 0.67

Since the cost performance index is less than one, you are over budget. Now you will calculate the new estimate at completion and use the formula for case-II which is based on the EAC.

Estimate at Completion (EAC) = BAC/CPI

= 100,000/0.67

= 149,253.73 USD

Hence, Estimate at Completion (EAC) = 149,253.73 USD

Now, TCPI = (BAC – EV)/(EAC – AC)

= (100,000 – 40,000)/(149,253.73 – 60,000)

=60,000/89,253.73

=0.67

TCPI = 0.67

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

Remember that if you have calculated the estimate at completion using the earned value management formula (EAC = BAC/CPI), the TCPI will be equal to the CPI at the moment when you calculate the TCPI the first time. This is because while calculating the estimate at completion you have already assumed that the future cost performance of the project will be the same as the past cost performance of the project.

We have finished outlining the technical details of the To Complete Performance Index (TCPI), so now let’s see the use of TCPI a real world scenario.

Suppose you have been given a job to paint 10,000 square feet in 10 days. This means you have to paint 1,000 square feet per day to complete the project on time.

You start the painting job but when you review your progress after 5 days, you find that only 3,000 square feet has been painted.

Now you have 5 days left and 7,000 square feet is yet to be painted. You calculate and deduce that if you want to complete your task within 10 days, you will have to paint 1,400 square feet per day.

This will be your future performance to complete the task on time, and this future performance is known as the To Complete Performance Index (TCPI). Please note that the Cost Performance Index (CPI) is your past performance and the TCPI is your future performance which you must meet to complete the project within the approved budget.

You may also consider what will happen if you perform better; i.e. you painted 7,000 square feet in 5 days. This means that you now have to paint 3,000 square feet in three days. In this case, you can paint 600 square feet per day to complete the task. In other words, you can comfortably complete the task.

(The above example may not be a technically perfect example for the TCPI; however, I believe that it will help you understand the concept easily.)

Before I conclude this post, let’s revisit some key points:

  • CPI is the past cost performance of the project; on the other hand, TCPI is the future cost performance of the project.
  • If you are under budget, you will calculate the TCPI based on the BAC.
  • If you are over budget, you will calculate the TCPI based on the EAC.
  • If the To Complete Performance Index is less than one, you are in a comfortable position.
  • If the To Complete Performance Index is greater than one, you have to perform with a better cost performance than the past cost performance.
  • If the To Complete Performance Index is equal to one, you can continue with the same cost performance.

Summary

The To Complete Performance Index is a forecasting tool which helps you find the future efficiency of the project which you have to follow for the remaining work of the project in order to complete the project within the budget. If the TCPI is less than one, it is good news for you, while in the case of performance indexes, the opposite is true; i.e. if the indexes are greater than one, it is good for the project.

This is the last installment in a series of seven articles on earned value analysis, forecasting and the To Complete Performance Index. I tried my best to make these concepts and calculations easy for you; however, if you still have some doubt, you can contact me through the comments section.

If you are interested in learning all the mathematical formulas for the PMP exam, you can try my PMP Formula Guide. You can also try my PMP Question Bank to practice 400 PMP exam sample questions.

image credit => FreeDigitalPhotos.net

Comments

  1. Mayer says

    Your example looks incorrect. You are 6 months into the project, half way through the 12 month target. You have EV of $40,000 (less than half of PV, which means you are behind schedule), and AC of $60,000 (more than half of PV, which means you are over budget). The TCPI must necessarily be greater than 1, because you need to before better than projected to make up for being behind schedule.

    • says

      Point-1: You have EV of $40,000 (less than half of PV, which means you are behind schedule) — Correct

      Point-2: AC of $60,000 (more than half of PV, which means you are over budget) — Correct

      Now, since we are over budget and cannot complete the project within the given budget; therefore, project manager will calculate the new budget that will be EAC and get it approved.

      Now you have to complete the project within this "new budget." And TCPI is calculated for this new approved budget (i.e. EAC). In the given example it is $149,253.73

      • xman says

        The project manager can’t just not go out and get the budget changed on some number. As per PMI practices, he will need to calculate the TCPI, which will now be higher than 1 (1.5 to be exact), and see what options he can use to bring the project back on track to meet the budget. He can use management reserves if not already used up at this time if the deviation is due to some unknown risk materializing, or he could use contingency reserves if available for the known risk that has materialized and has caused the deviation, or he could take corrective actions. He could also look for advise from resources, and senior management or OPA to find out what can be done to bring project back on track, meaning TCPI of 1.5. Finally he could also discuss with sponsor if there is a possibility of modifying the scope or change schedule. It depends on which part of scope triangle is movable for the sponsor : cost, schedule, or scope. Only if he get’s a confirmation that cost is the movable end, and can be revised, will he go back to the drawing board, and start re-estimating, and calculate the new cost baseline, and cost budget.

        He can only request to revise the budget, if all of the above options have been exhausted, and even in that case, the budget would be revised, not by TCPI, but using the most appropriate estimation criteria to calculate the revised budget of the project. This would exclude the sunk cost, and use different estimating models for the remaining period of the project. In your example, if he get’s the new budget approved (which is wrong anyway) and then starts using 0.67 as the CPI for the remainder of the project, he will still be over budget, and off track from day 1.

      • Talha says

        @ Fahad Usmani

        What i believe is that you have very easily made every one understand the concept of TCPI with your blog.

        @Mayer

        It cannot be assumed that planned value would be equal to the budgeted value with the time duration passed because there are different types of planning and project management techniques were done on each project .Few project has Front loaded curves ,few has Backloaded Curves,few have double peaks curves,few have late peak curve so it is not necessary that if 50 % of the total duration has passed then your planned value would be 50 % of the budgeted value.This is just for your information and knowledge.

  2. kabeer says

    First of all thanks for the great article. Its very easy to understand. but i have a small doubt

    you have said
    If To-Complete Performance Index (TCPI) is less than one, then you’re in comfortable position.
    Here in the above case we have a TCPI less than one (0.67) and we are forced to increase the budget from 1,00,000 to 1,49,253. It is not comfortable position as u have said.

    Anyway thanks once again.

    • Fahad Usmani says

      TCPI 0.67 is calculated based on new approved budget (EAC) i.e. $149,253. This TCPI is not calculated based on old budget (BAC).

      • Josh says

        I’m confused when i read your example too. Maybe you can add sth like

        “This means that you can continue with a Cost Performance Index of 0.67 to complete the project. But he needs to get approval for EAC @149k”. Because the conclusion sounds like the project is ok but actually it’s bad.

        • Fahad Usmani says

          You are right Josh since the CPI is less than one, you are over budget and you need to get approved new budget.

  3. Sagar says

    In the above example, even after we have increased our budget we are still not in a comfortable position with TCPI at 0.67…
    I guess in this example it was a coincidence that CPI and TCPI are same and hence the confusion..

  4. Arturo says

    TCPI is an index that tells you which should be your future average CPI index of project performance regarding cost, based on actual CPI of the already project phased performed, if you wants to achive successfully the project total budget objetive.
    Of course, if your actual CPI1 if you want to achive the same baseline BAC budgeting objetive, wich is the same to say that your average remaining EV has to be greater, than the remaining PV as first reference, and finally than the remaining costs you will use (expenditures) to perform the reamining project activities up to completion, to meat budget goal.
    From this point of view the situation of “uncomfortability” is due that the cost performance within your project is unsatisfactory by now and you are oblied to take corrective and/or preventive actions to motivate the project team/staff/stakeholders in increasing majorly work productivity and/or effectiveness in on-going and from-now-on activities.
    But, always from the PM(Project Manager) point of view, it is more unconfortable, to ask for the approval, from the executive Projects Director, of the ETC (BAC/CPI as Fahad Usmani calculation) budget like the new project total budget objetive.
    Of course if you are able to conquest this without been head-cutted, your new TCPI should be <1 (and equal in value with actual CPI cause of ETC calculation formula choosed), and now the situation will be more "comfortable" (less uncomfortable would be righter) cause manteining, for example, your remainingEV=remainig baselinePV you have a margin to manage your project team/staff/stakeholders with minor productivity/effectiveness improvements.

    • Arturo says

      I repeat the comment cause there was a misunderstanding sentence due to the difficulty in approaching TCPI concept. What I’m obviously trying is, departing from the intelligent Usmani’s exposition, readding yours smart comments/dubts and adding humbly my reasonings, to cause further discussions that allow all of us to better EVM knowledge by corroborating different points of view.

      TCPI is an index that tells you which should be your future average CPI index of project performance regarding cost, based on actual CPI of the already project phases performed, if you wants to achive successfully the project total budget objetive.
      Of course, if your actual CPI1 wich means that your future average CPI has to be >1 if you want to achive the same baseline BAC budgeting objetive, wich is the same to say that your average remaining EV has to be greater, than the remaining PV as first reference, and finally than the remaining costs (expenditures) you will use to perform the reamining project activities up to completion, to meat budget goal.
      From this point of view the situation of “uncomfortability” is due that the cost performance within your project is unsatisfactory by now and you, as PM(Project Manager) are oblied to take corrective and/or preventive actions to motivate the project team/staff/stakeholders in increasing majorly work productivity and/or effectiveness in on-going and from-now-on activities.
      But, always from the PM point of view, it is more unconfortable to ask for the approval, from the executive Projects Director, of the ETC (BAC/CPI selon Fahad Usmani calculation) budget as the new project total budget objetive.
      Of course if you are able to conquest this without been head-cutted, your new TCPI should be <1 (and equal in value with actual CPI cause of ETC calculation formula choosed; personally I prefer ETC=[BAC-CV]/CPI formula to avoid this type of confusing coincidences), and now the situation will be more "comfortable" (less uncomfortable would be righter) cause manteining, for example, your remainingEV=remainig baselinePV you have a margin to manage your project team/staff/stakeholders with minor productivity/effectiveness improvements.

      Read more: http://pmstudycircle.com/2012/05/to-complete-performance-index-tcpi-in-project-cost-management/#ixzz2Jg7Fb3OR
      Follow us: @PMStudycircle on Twitter

      • Fahad Usmani says

        Thank you Arturo for providing such detail explanation about the TCPI. In fact, TCPI is relatively new concept coined by PMI therefore many people find it bit confusing.

        I think your this explanation will help them to better understand the topic.

        • Arturo says

          Thank you so much Usmani for your comment; it’s great for me if you think I have done my bit to help.

          Usmani, something happend when replaying comments that, again, certain phrases have lost words and they became confusing:

          Example:
          “Of course, if your actual CPI1 wich means that your future CPI has to be >1 if …”

          it’s wrongly updated in web’s design regarding the action of someones reply; the correct phrase, as original writing and as you have read it firstly, is:

          “Of course, if your actual CPI 1 by sure, wich means that your future CPI has to be >1 if …”

          In any case I would like to express my thankfullness for your explanations. I’m approching by now your interesting blogs regarding Risk Management.

          • Fahad Usmani says

            Hello Arturo,

            I think that it might be a software bug. Hope by next update this issue will be addressed.

            Thanks for your visit.

  5. Sikandar Jameel says

    In this example, the project manager realized his CPI was poor. He then convinced management to increase the project budget because of the poor CPI performance based on the original BAC. Now, he can continue with the poor CPI performance based on the original BAC since he got the increased budget. If we were to calculate the TCPI based on the new budget baseline, it would be 1, i.e. (EAC-AC)/ETC.

  6. Chloe says

    I’m doing a practice test for PMP, and I’m having a difficult time understanding the formula used in the answer sheet.
    ——————————
    The question:
    For your project, find the to-complete performance index (TCPI) based on the given data:
    BAC: 700,000
    CV: 25,000
    EV: 200,000
    Estimate to Complete has now been revised to 425,000
    ——————————

    My answer: Based on your explanation above, this project should be “under budget”, thus it is correct to use the formula of TCPI=(BAC-EV)/(BAC-AC)

    But the answer sheet uses this formula instead: TCPI=(BAC-EV)/(EAC-AC)

    Can you help me explain why?

    • Fahad Usmani says

      Hello Chloe,

      “Estimate to Complete has been revised to 425,000”, it means you budget has been changed.

      Therefore, now you have to calculate the TCPI based on new approved budget, and that is “EAC”.

      Remember one thing, if your initial budget (BAC) remains unchanged, then you can use the first formula otherwise go for the formula based on EAC.

  7. Phillips says

    Can you explain the concept of Estimate At Completion (EAC) and why we have BAC/CPI formula?
    Thank you

  8. Yashar says

    Why do we have to put BAC in the numerator and EAC in the denominator in the case when we are over the budget? Would not it make sense to have EAC in both places if we want to compare “apples to apples”?

    • Fahad Usmani says

      Both are representing the budget. EAC is nothing but a new approved budget.
      Both are still apples!
      :)

  9. Avinesh says

    Hi Fahad,
    Thanks for the great explanation.
    I just have one doubt. Let us take and example in which after going half way through the project progress we have BAC=10000, EV=4000, PV=5000, AC=6000. Can you please tell me what should be the rate of work done achieved by a project team so that there is no cost deviation. Thanks in advance.
    Regards, Avinesh

  10. Avinesh says

    Hi Fahad,
    Thanks for the great explanation. I just have one doubt.
    Let us take and example in which after going half way through the project progress we have the following figures
    BAC=10000, EV=4000, PV=5000, AC=6000.
    What should be the rate of work done so that the project completes in time and there is NO COST overrun. Practically project managers will be hit by this situation. They have to do the work mostly under tight budgets and getting approvals is very difficult.
    Thanks in advance.
    Regards, Avinesh

    Read more: http://pmstudycircle.com/2012/05/to-complete-performance-index-tcpi-in-project-cost-management/#ixzz2SngDid6w
    Follow us: @PMStudycircle on Twitter

    • Fahad Usmani says

      Hello Avinesh,

      Since there is no cost overrun, you can calculate the TCPI by using following formula:

      TCPI = (BAC–EV)/(BAC–AC)

      • nemozny says

        Which is TCPI = (10000 – 4000) / (10000 – 6000) = 6/4 = 1.5

        Meaning you need to work a lot harder (150%) to keep up with the original budget.

  11. michael says

    Hi Fahad,

    Thanks for the great explanation.

    please i need your support to explain “probability distribution PMPBOK 4TH page 297”

    i am trying to understand what is the difference between discrete and continues distribution also what is uniform distribution ….. actually i cant understand anything from this page

    thanks to support me to understand it

    BR//
    michael

  12. says

    I have two points, if I may ask:

    from the definition of the TCPI it mean “how should I perform for the remaining work (BAC-EV) with the remaining planned Budget (BAC-AC)” – correct

    from this, if I had bad performance before (original CPI 1, if not possible to perform like that then we request to change BAC to EAC, so in your example the original CPI<1 and using the definition the TCPI will be 1.5, if this correct then this make sense, but the problem if I use the same formula when I'm under budget then it will lead to TCPI < 1, which by your explanation is good and it is, but also mean you should spend more and earn less which is a problem, so I think we should make a new EAC and to be less than the original BAC by going back to track so that EAC=BAC-CV or EAC=BAC/CPI, because it means we can save more.

    if we use the formula " TCPI=(BAC-EV)/(EAC-AC) " then the TCPI=CPI "original", always because the EAC=BAC/CPI, so why not to say TCPI=CPI.

    sorry for talking "writing" so much

  13. Fahad Usmani says

    If you are under budget then there is no need to change the formula unless there is a huge margin which will indicate that there was some error in your cost calculations. If it is so, you can go for a new cost estimate…

    • says

      what about the rest, and the definition, if I will not change the formula then I must spend more and earn less to match the BAC, and what for the over-Budget condition?

        • says

          OK, and I would calculate the new budget based on the EAC formula, which brings us back to the CPI=TCPI point every time I will use the suggested formula, so I mean the TCPI formulas it self is the problem, when I’m under budget I should use another formula for EAC such as “EAC=BAC-CV” which would mean reducing my budget by going back to the planned track and TCPI=1, or even reduce it using “EAC=BAC/CPI” which means TCPI=CPI and keep what you are doing by saving more money, and if we don’t calculate a new budget and we use the original BAC this means we have to spend more and waste what we have saved till now.

          so it is all confusing in the under-budget situation only, what about over budget too.

          • Fahad Usmani says

            TCPI gives you an indication how you’re performing. It helps you investigate further to find the future course of action.

  14. Jerry says

    This is one of the annoyances I have with the PMBOK book, there are far too many assumptions which are often unexplained. I have yet to find a passage that says the EAC is the new approved budget. This discussion thread is VERY helpful to understand the concepts of TCPI. So thank you Fahad for laying it out so clearly. Coincidentally, I used the same numbers in a manual exercise to understand the different methods of calculating EAC before hitting Google and finding your discussion.

    Assuming the new number is the approved budget, it does make sense that an index less than 1.0 is going to be easier to complete however in practice if you are running well over budget, the assumption of an “automatic” approval is not a good one. In 20 years of project management, I have never seen a project running 50% over budget, getting approval to double the budget and coast to the finish line.

    • Fahad Usmani says

      Hello Jerry,

      There are a few inconsistencies in the PMBOK and in some places it lacks clarity. Hope to see improvement the new version of the guide.

  15. Jenn says

    Quick question.. How do you calculate and assess your cpi and tcpi if the work package is an LOE?

  16. Vaibhav Wagh says

    Dear Fahad,

    The above article on To Complete Performance Indicator(TCPI) was really good. Thanks for the detailed explanation on the same.

    Can you please write similar article for To Complete Schedule Performance Indicator (TSPI), Final Cost & Final Planned Duration too.

    All i got is ==>

    1. TSPI = (Total Budgeted Cost – Earned Value (EV)) / (Total Budgeted Cost – Planned Value (PV))
    2. Final Cost = BAC/CPI
    3. Final Planned Duration = Estimated Hours/SPI

    Thanks & Best Regards,

    Vaibhav Wagh

    • Fahad Usmani says

      Hello Vaibhav,

      From where did you get this “To Complete Schedule Performance Indicator (TSPI)” term?

      • Vaibhav Wagh says

        Hi Fahad,

        Actually i searched for Earned Value Management(EVM) on google where i found many articles. I combined all terms of different different articles & i found that the term “TSPI-To Complete Schedule Performance Indicator” is not present in many articles(i think it is not there is PMBOK too). Also the article in which i found this term TSPI there they have “TCPI= To Complete COST Performance Indicator”.

        As per them CPI indicates Cost Performance which is EV/AC & TCPI is ratio of (BAC-EV)/(BAC-AC) or (BAC-EV)/(EAC-AC) hence it is also relating with actual cost hence it is To Complete Cost Performance Indicator

        &

        SPI indicates Schedule Performance which is EV/PV & TCPI is ratio of (BAC-EV)/(BAC-PV) or (BAC-EV)/(EAC-PV) hence it is also relating with Planned Value hence it is To Complete Schedule Performance Indicator.

        Now where did i get it (Just search TCPI & TSPI on google you will find it)

        • Vaibhav Wagh says

          Just correctin that Para

          SPI indicates Schedule Performance which is EV/PV & TSPI is ratio of (BAC-EV)/(BAC-PV) or (BAC-EV)/(EAC-PV) hence it is also relating with Planned Value hence it is To Complete Schedule Performance Indicator.

  17. Vikrant Bhalerao says

    First of all let me thank you for posting such beautiful articles. Earlier i was very confused after going through study material given by one of the training institutes and the trainer was also in hurry to complete the topic so he did not explained us very well. But after referring your articles all my doubts regarding the formulas and calculations are solved and i am feeling very confident for solving calculations. Thank you very much sir please keep on posting.

  18. Michael says

    I agree with xman. I believe the purpose of TCPI is to find out “What will it take to get back on track?”. It is not likely that being over budget by 50% will be welcomed. One should use TCPI to figure out how do I get control and get back on track. The PM should analyze why the project is off budget/schedule. Is the problem going to continue or was it just a one off (which EAC calc to use). Based on your example, I would say that the team has to work 50% harder/faster to get back on track (now it might not be possible or feasible) but that is what TCPI is telling me (1.5).

      • nemozny says

        Because increasing budget (replacing BAC for EAC) means you are very easy on yourself. You can’t do it in a real world, most frequently.
        So TCPI 1.5 comes out with leaving (BAC – EV)/(BAC – AC). Just this. And you do weekends for free.

  19. Michael says

    Fahad, check xman’s response above (near the beginning). He explains it in detail. The main point is TCPI is to validate/determine what will it take to get back on track. One cannot assume that what looks like an estimate of 50% over budget will be met with open arms. One cannot expect to go get an increase in budget with what looks like extreme cost over runs. That is the main point. Thanks.

  20. Kandarp Mehta says

    I remember TCPI as below :

    Imagine you’re driving your car home and your wife has asked you to be at home by 7 pm. Its 6.45 pm now and still 30 miles to go. Your TCPI is the speed by which you’ll thrust your car to arrive home in time. :-)

  21. Sameh says

    Fahad
    First of all , I am proud to find one Arab people like you , thank you for your efforts and profession-laity ,
    Best luck

    • Fahad Usmani says

      Thanks Sameh for your visit and leaving comment. Anyway, I am an Indian, working and living in Kuwait.

  22. Tauseef Qureshey says

    If TCPI is greater than 1 does it means we have to calculate one more time EAC or a new EAC ?

  23. Hardeep says

    Hi Fahad,

    EAC used in above TCPI formula is BAC/CPI but everything is Not going normal.

    So, i think EAC should be used as AC + (BAC-EV) / CPI *SPI –>> because we are over budget (60000) work done by 40000. In ideal case work had to be 50000 done.

    Let me know what you think ?

    • Fahad Usmani says

      There can be different situations to calculate the EAC. Once you get the EAC, you can use the TCPI formula.

    • Vin Rampersad says

      Hello Hardeep,

      Estimate At Completion, EAC = AC + ETC.

      Estimate to Complete, ETC = pf x (BAC-EV) where pf is the performance factor.

      pf = 1/CPI yields an Optimistic / Realistic results

      pf = 1/(CPI x SPI) yields a Pessimstic / Realistic result

      This is according to Oracle in Primavera P6.

      You are right, since the project is behind schedule, the SPI should also be taken into account.

  24. Adil Manzoor says

    Great effort @ Fahad but still i am confused. In the above example CPI & TCPI both are same that is 0.67 which means we should continue with our past cost performance (CPI) & no need to care about future performance of the project? Kindly elaborate it

  25. Andrew W. says

    PMI did not come up with the concept of TCPI within the last few years. They didn’t come up with it at all. It has been around far longer than EVM has been called EVM.

    Your example, while a good explanation of calculating TCPI, erroneously assumed that it is an acceptable practice to calculate that index against only the new EAC. It is a far more useful practice, and more diligent, to calculate it against both the new EAC and the BAC to ensure that there is clear visibility into the performance difference required to meet the terms of the contract versus the estimate provided by a program manager.

    • Fahad Usmani says

      My example is based on the PMBOK Guide, which explains the two cases. Although I have given one example in this blog post, I have discussed the both cases.

      I don’t consider it as an error.

      Anyway I am going to update this blog post to include a mathematical example on other case as well.

      Regarding the TCPI, can you please provide me any proof that it was being used before the PMI start using it.

  26. Manoj Kumar says

    Hi,

    I have one doubt. If a project is over budgeted at a point of time and you are now required to calculate TCPI. Now, if you wish to calculate TCPI w.r.t. EAC then TCPI will always be equal to CPI that means there is no need to calculate TCPI w.r.t. EAC. A project will continue with same EAC budget.
    Should not TCPI play a role when at a point of time you are over budget and now you wish to complete the project in the earlier approved budget i.e. BAC, then TCPI will be greater then 1(in all cases).

    Your comments please.

    • Fahad Usmani says

      You will always try to complete the project with BAC, and when it is not possible, you will calculate the new budget.

  27. Navneet says

    Hi Fahad. I must start with thanking you for great explanation.

    However, I see that there is a calculation error.

    ============================================================
    Example of TCPI: Case-I

    You are working on a project to be completed in 24 months and the total cost of the project is 200,000 USD. Twelve months have passed and 110,000 USD has been spent, and 60% of the work has been completed so far.

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

    Given in the question:

    Budget at Completion (BAC) = 200,000 USD

    Actual Cost (AC) = 110,000 USD

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

    = 100,000 USD

    Earned Value (EV) = 60% of 200,000

    = 120,000 USD

    Cost Performance Index (CPI) = EV / AC

    = 120,000 /100,000

    = 1.2
    ============================================================

    You have taken AC = 100,000.

    Whereas, AC = 110,000.

    So, per new calculation:

    CPI = EV/AC = 1.2/1.1 = 1.0909

    Well, again, CPI is definitely > 1.

    Hence, rest of the explanation remains the same (as you have stated).

    Hope this helps the rest of the readers of this Blog Page as well.

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