TCPI: To-Complete Performance Index – BAC vs EAC Calculation

PMBOK v8 Definition

The To-Complete Performance Index (TCPI) is a measure of the cost performance that should be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget. The TCPI is the calculated cost performance index that is achieved on the remaining work to meet a specified management goal such as the Budget at Completion (BAC) or Estimate at Completion (EAC).

Why It Matters for the Exam

TCPI appears frequently in PMI exam questions testing your ability to calculate whether a project can recover from cost overruns. You will see it in earned value management (EVM) questions where you must determine if the remaining work efficiency target is realistic or impossible to achieve.

Key Points to Remember (for the exam)

• Two TCPI Formulas:

  • TCPI (BAC) = (BAC − EV) / (BAC − AC) — used when the original budget is still viable
  • TCPI (EAC) = (BAC − EV) / (EAC − AC) — used when BAC is no longer achievable and EAC replaces it

• Interpretation of Result:

  • Greater than 1.0 = Harder to complete (must perform better than planned)
  • Exactly 1.0 = Same to complete (maintain current performance)
  • Less than 1.0 = Easier to complete (can perform worse than planned)

• When to Use EAC Instead of BAC: If it becomes obvious that the BAC is no longer viable, the project manager should consider the forecasted EAC. Once approved, the EAC may replace the BAC in the TCPI calculation.

• TCPI (EAC) Line: The level of performance displayed as the TCPI (EAC) line represents a judgment call based on several considerations, including risk, time remaining in the project, and technical performance.

• Work Remaining: Always defined as (BAC − EV) in both formulas.

• Funds Remaining: Can be either (BAC − AC) for TCPI (BAC) or (EAC − AC) for TCPI (EAC).

• Cumulative CPI Baseline: If the cumulative CPI falls below the baseline, all future work should be performed immediately in the range of the TCPI (BAC) to stay within the authorized BAC.

Typical PMI Exam Example

A project has BAC = $100,000, EV = $40,000, AC = $50,000. The project manager determines BAC is no longer viable and forecasts EAC = $110,000. What is the TCPI (EAC)?

Calculation: (BAC − EV) / (EAC − AC) = ($100,000 − $40,000) / ($110,000 − $50,000) = $60,000 / $60,000 = 1.0. This means the remaining work must be performed at exactly the same efficiency as planned.

PMI Exam Traps

• Trap: Using BAC in the denominator when EAC should be used

  • Reality: Use BAC only when BAC is still viable; use EAC when BAC is no longer achievable

• Trap: Confusing TCPI with CPI (Cost Performance Index)

  • Reality: CPI measures past performance (EV/AC); TCPI measures required future performance (work remaining / funds remaining)

• Trap: Interpreting TCPI > 1.0 as "good performance"

  • Reality: TCPI > 1.0 means the remaining work is HARDER to complete (must perform better than planned)

• Trap: Forgetting that TCPI (EAC) is a judgment call

  • Reality: Whether the TCPI level of performance is achievable depends on risk, time remaining, and technical performance

Important PMI Connections

Quick Review Questions

1. A project has BAC = $200,000, EV = $80,000, AC = $100,000. What is the TCPI (BAC)?

2. When should a project manager switch from TCPI (BAC) to TCPI (EAC)?

3. If TCPI = 1.2, is completing the remaining work easier or harder than planned performance?

4. A project has BAC = $500,000, EV = $300,000, AC = $350,000, and approved EAC = $550,000. Calculate TCPI (EAC).

5. What three factors should be considered when determining if the TCPI level of performance is achievable?

PMBOK v8 Reference

Section 5.0 - Earned Value Management (Table 5-1, Figure 5-24)