Forecasting helps us predict future events, and it has been used in every part of the world since the dawn of time.

People from different cultures use different methods to predict the future. Some people use the movement of the moon or stars to predict the future and others use palm lines to predict it.

In project management we also do forecasting to find the future performance of projects.

However, here the forecasting is based on past performance and objective data, which provides you with the future progress of the project and gives an early indication if anything may go wrong.

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.

I have discussed earned value management in detail and provided a short explanation of its three elements: Planned Value (PV), Actual Cost (AC), and Earned Value (EV).

Now we are going to look at these elements in detail, including mathematical calculations. Therefore, I request you to go through every step thoroughly; missing any step will make further calculations difficult to solve .

The calculations for finding Planned Value, Earned Value, and Actual Cost are simple, and once you understand them, the rest will be easy. Although I am going to explain them thoroughly, I suggest you obtain a good PMP exam reference book for further reading and practice questions.

Schedule Variance and Cost Variance are two important parameters in earned value management, helping you analyze the project’s progress, i.e. how are you performing in terms of schedule and cost.

In my previous blog posts I have discussed earned value management and its three basic elements.

If you have not read these blog posts, I suggest you read them first, then come back to this post. In this post I will discuss Schedule Variance and Cost Variance, which are determined with the help of earned value, planned value and actual cost.

Let us start with an example:

Suppose you are managing a construction project, and the client comes and asks you to update him about the current status and progress of the project.