To-Complete Performance Index (TCPI): Cost Performance Required on Remaining Work

PMBOK v8 Definition

The To-Complete Performance Index (TCPI) is the calculated cost performance index that is achieved on the remaining work to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget. The equation for TCPI is: (BAC − EV) / (BAC − AC) where BAC = budget at completion, EV = earned value, and AC = actual cost. If the BAC is no longer viable, the project manager should consider the forecasted estimate at completion (EAC), and once approved, the EAC may replace the BAC in the TCPI calculation.

Why It Matters for the Exam

TCPI is a high-frequency exam concept because it tests your ability to determine the required cost efficiency on remaining work to achieve a specific management target. Questions typically appear in earned value management (EVM) scenarios where you must calculate whether a project can recover its budget or needs a new forecast, often combined with CPI and EAC comparisons.

Key Points to Remember (for the exam)

• Definition: TCPI = (BAC − EV) / (BAC − AC) — the ratio of remaining work (BAC − EV) to remaining funds (BAC − AC).
• Management Goal: TCPI measures the cost performance needed on the remaining work to meet a specified goal, such as BAC or EAC.
• When 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.
• Interpretation: If TCPI > 1.0, the remaining work must be done more efficiently than planned (i.e., at a lower cost per unit). If TCPI < 1.0, the remaining work can be done less efficiently and still meet the goal.
• Common Confusion: TCPI is often confused with CPI (Cost Performance Index). CPI measures past performance (EV/AC), while TCPI forecasts required future performance to meet a target.
• Key Distinction: TCPI uses BAC (original budget) or EAC (revised estimate) in the denominator, not AC. This is a frequent exam trap.
• Exam Tip: Always check whether the question specifies “to meet BAC” or “to meet EAC” — this changes the denominator.

Typical PMI Exam Example

Your project has a BAC of $500,000, EV of $300,000, and AC of $350,000. The project manager determines the BAC is no longer viable and obtains approval to use the EAC of $600,000. What is the TCPI to meet the new EAC?
Calculate: (BAC − EV) / (EAC − AC) = ($500,000 − $300,000) / ($600,000 − $350,000) = $200,000 / $250,000 = 0.80. This means the remaining work can be done at 80% efficiency to meet the revised target.

PMI Exam Traps

• Trap: Using AC instead of BAC or EAC in the denominator.
  Reality: TCPI denominator is the remaining budget (BAC − AC or EAC − AC), not AC alone.

• Trap: Confusing TCPI with CPI.
  Reality: CPI = EV/AC (past performance); TCPI = (BAC − EV)/(BAC − AC) or (BAC − EV)/(EAC − AC) (required future performance).

• Trap: Assuming TCPI always uses BAC.
  Reality: When BAC is no longer viable, the approved EAC replaces BAC in the denominator.

• Trap: Misinterpreting TCPI values.
  Reality: TCPI > 1.0 means you must outperform the plan to meet the goal; TCPI < 1.0 means you have slack.

Important PMI Connections

Quick Review Questions

1. A project has BAC = $200,000, EV = $120,000, AC = $150,000. What is the TCPI to meet the BAC?
2. If the BAC is no longer viable and the approved EAC is $250,000, what is the TCPI using the same data from question 1?
3. A TCPI of 1.15 means the remaining work must be performed at what level of efficiency compared to the original plan?
4. What is the key difference between TCPI and CPI in terms of what they measure?
5. Under what condition does the project manager replace BAC with EAC in the TCPI calculation?

PMBOK v8 Reference

Section 2.6.2.2 – Estimate Resources (Note: The TCPI definition appears in the provided context as part of the Resources performance domain, specifically in the context of cost management and earned value analysis.)