Understanding To-Complete

Performance Index (TCPI) in Project

Cost Management
The Definition
• The TCPI gives the future Cost Performance Index. You have
to follow it for the remaining work to complete the project
within the budget.

• According to the PMBOK Guide:

“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.”

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TCPI Calculations
• The To Complete Performance Index 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 on EAC.
• TCPI = (Remaining Work) / (Remaining Funds)
• Remaining Work = Total budget – Earned Value = (BAC – EV)
• You can find the remaining funds in two cases: when you are
under budget; and when you are over budget.

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TCPI Calculations
Case I: You’re Under Budget
• The remaining funds = Budget at Completion – Actual Cost = BAC – AC
TCPI = (BAC – EV) / (BAC – AC)
Case II: You’re Over Budget
• The remaining funds = Estimate at Completion – Actual Cost = 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)

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Example: Case-I
You are working on a project to be completed in 24
months. The BAC of the project is 200,000 USD. 12
months have passed, you have spent 110,000 USD, and
60% of the work has been completed. Find the TCPI for
this project.

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Example: Case-I
• 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
• CPI = EV / AC = 120,000 / 110,000 = 1.1
Since CPI > 1, you are under budget. Therefore, you will use the TCPI
formula based on the BAC in this case.
• 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 CPI of 0.89 to complete the
project.
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Example: Case-II
You have a project to be completed in 12 months. The budget
of the project is 100,000 USD. 6 months have passed, and you
have spent 60,000 USD, but on closer examination, you find
that only 40% of the work has been completed so far. Find the
TCPI for this project.

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 Example: Case-II
• 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
• CPI = EV / AC = 40,000 /60,000 = 0.67
Since the CPI < 1, you are over budget. Now you will calculate the new EAC
and use the formula based on the EAC.
• EAC = BAC / CPI = 100,000 / 0.67 = 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
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Note…
If you have calculated the EAC using the Earned Value
Management formula (EAC = BAC / CPI), the TCPI will be equal
to the CPI when you calculate the TCPI the first time.
This is because you have assumed that the future cost
performance of the project will be the same as the past while
calculating the EAC.

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An Easier Real-World Example!
• Suppose you have a project to paint 10,000 square feet in 10 days.
This means you have to paint 1,000 square feet per day.
• When you review your progress halfway through, you find that only
3,000 square feet has been painted.
• Now, you have five days left and 7,000 square feet yet to be painted.
You calculate that you will have to paint 1,400 square feet per day if
you are to complete the task within ten days.
• This must be your future performance to complete the task on time.
This future performance is the TCPI.

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An Easier Real-World Example!
• You can also calculate what will happen if you painted 7,000
square feet to this date. This means that you now have to
paint 3,000 square feet in 5 days. Here, you can paint 600
square feet per day to complete the task, which is a more
comfortable goal.

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Concluding…
• CPI is the past cost performance of the project, and TCPI is the
future cost performance of the project.
• You will calculate the TCPI based on the BAC if you are under
budget.
• You will calculate the TCPI based on the EAC if you are over
budget.
• If the TCPI < 1, you are in a comfortable position.
• You have to perform with a better cost performance than the
past cost performance if the TCPI > 1. You can continue with the
same cost performance if the TCPI = 1.
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