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To-Complete Performance Index

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To-Complete Performance Index (TCPI) is an EVM metric that helps project managers estimate the required future cost efficiency to achieve a specific project goal, like meeting a target budget. The index is calculated by dividing the remaining work (Budget at Completion minus Earned Value) by the remaining budget (Budget at Completion minus Actual Cost), i.e., TCPI = (BAC - EV) / (BAC - AC). A TCPI greater than 1 indicates that the project must perform more efficiently in the future to meet the cost objective, while a TCPI less than 1 implies that the project can afford to be less efficient. By monitoring TCPI, project managers can identify potential issues early and take corrective actions to improve project performance and increase the likelihood of meeting the desired objectives.

Guide to To-Complete Performance Index (TCPI)

The To-Complete Performance Index (TCPI) is a fundamental concept in the PMBOK Guide 7th Edition. It is a crucial aspect of Earned Value Management (EVM) which helps project managers understand, control costs and predict future performance of projects.

Why is it Important:
TCPI allows project managers to assess the efficiency at which project resources must be utilized for the remaining work to meet a specific management goal. It's an early warning tool that allows managers to correct or change the course of action.

What is TCPI:
TCPI is the calculated projection of cost performance that must be achieved on the remaining work to meet a specific management goal. It's the ratio between the remaining work and remaining funds.

How it Works:
TCPI is calculated by taking the difference between the Budget at Completion (BAC) and Earned Value (EV), then dividing by the difference between the Estimate at Completion (EAC) and the Earned Value (EV).

Exam Tips on answering questions about TCPI:
Understanding and memorizing the formula to calculate TCPI is important. Review examples of TCPI calculations to understand how it's applied in real-world scenarios. If TCPI is more than one, then more efficiency is needed to complete the project. If it's less than one, then the efficiency currently being observed is sufficient for completing the project within the budget. Use these insights to answer questions.

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PMP - Earned Value Management Example Questions

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Question 1

While managing a public awareness campaign, you note that the earned value (EV) is $20,000, the actual cost (AC) is $25,000, and the planned value (PV) is $22,000. If the campaign's budget is raised to $45,000, calculate the new To-Complete Performance Index (TCPI).

Correct Answer: 1.25

To calculate the To-Complete Performance Index (TCPI), we use the formula: TCPI = (Budget at Completion - Earned Value) / (Budget at Completion - Actual Cost) Given: Earned Value (EV) is $20,000. Actual Cost (AC) is $25,000. The budget is raised to $45,000, which becomes the new Budget at Completion (BAC). Substitute these values into the formula: TCPI = (45000-20000) / (45000 −25000) ​ Now, let's calculate this: The numerator is 45000 - 20000 = 25000. The denominator is 45000 - 25000 = 20000. Therefore, TCPI = 25000 / 20000. Calculating this gives us the TCPI value. The calculated To-Complete Performance Index (TCPI) for the campaign is 1.25.

Question 2

During a renovation project, you observe that your earned value (EV) is $280,000, your actual cost (AC) is $300,000, and your planned value (PV) is $290,000. What should be your To-Complete Performance Index (TCPI) if the project's total budget at completion rises to $700,000?

Correct Answer: 1.05

To calculate the To-Complete Performance Index (TCPI), we need to use the given information and the formula for TCPI. Given: - Earned Value (EV) = $280,000 - Actual Cost (AC) = $300,000 - Planned Value (PV) = $290,000 - New Budget at Completion (BAC) = $700,000 The formula for TCPI is: TCPI = (BAC - EV) / (BAC - AC) Let's solve the problem step by step: Step 1: Calculate the remaining work (BAC - EV) Remaining work = $700,000 - $280,000 = $420,000 Step 2: Calculate the remaining budget (BAC - AC) Remaining budget = $700,000 - $300,000 = $400,000 Step 3: Calculate the TCPI using the formula TCPI = (BAC - EV) / (BAC - AC) TCPI = $420,000 / $400,000 TCPI = 1.05

Question 3

You're handling an automation project. The earned value(EV) is $100,000 whereas the actual cost(AC) is $110,000. If the total budget is $500,000, calculate the To-Complete Performance Index (TCPI) to accomplish the project within the budget.

Correct Answer: 1.026

To find the To-Complete Performance Index (TCPI), we need to use the given information: - Earned Value (EV) = $100,000 - Actual Cost (AC) = $110,000 - Total Budget (Budget at Completion, or BAC) = $500,000 The TCPI is the ratio of the remaining work to the remaining budget. It indicates the efficiency needed to complete the project within the budget. Step 1: Calculate the remaining work (Budget at Completion - Earned Value). Remaining work = BAC - EV Remaining work = $500,000 - $100,000 = $400,000 Step 2: Calculate the remaining budget (Budget at Completion - Actual Cost). Remaining budget = BAC - AC Remaining budget = $500,000 - $110,000 = $390,000 Step 3: Calculate the To-Complete Performance Index (TCPI). TCPI = Remaining work ÷ Remaining budget TCPI = $400,000 ÷ $390,000 TCPI ≈ 1.026 Therefore, the To-Complete Performance Index (TCPI) is approximately 1.026. This means that the project team must work at an efficiency of 1.026 times the current efficiency to complete the project within the given budget.

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