The To-Complete Performance Index represents the efficiency level, specifically the CPI, that will make the project finish on time. It can be a powerful indicator because it is generally easy to ascertain if your people will be as productive as the indicator tells you. This indicator tends to be a bigger red flag than other indicators. For example, if it says your people need to be twice as efficient as the schedule, it tends to make you take notice that action needs to be taken.
There are two ways to calculate the TCPI:
- To achieve the original budget
If the goal is to achieve the original project budget, that is, the overrun or underrun has not resulted in a change to the project schedule and/or budget, the following formula applies:
- To achieve the EAC
If the goal is to achieve the project’s EAC, that is, a change has been made to the project and the EAC is the new project budget, use this formula. If additional funds covering the cost overrun have been requested and approved by the project sponsor, the EAC becomes the target of the project, and this scenario applies.
The closer the project is to completion the higher the CPI that will be necessary to complete on budget. It can become extreme near the end.
Also, if the project has already spent more than its budget the TCPI will be negative.
TCPI is the last column in the table of Earned Value metrics. We will assume the project budget has not been revised (EAC is simply a projection) and the goal is still the original project budget (formula #1, above).
TCPI = (BAC – EV) / (BAC – AC)
TCPI = ($10,000 – $2,000) / ($10,000 – $4,500) = 1.45.
|100||Set up Database||Mar. 1||Mar. 10||$10,000||$3,000||$2,000||$4,500||-$1,000||0.67||-$2,500||0.44||$18,182||$12,500||-$2,500||1.45|
This project team must be 45% more efficient than they have been to finish on budget. A seemingly difficult task.
For those who wish to have a short primer on how to use the earned value method, please see our Earned Value Tutorial.