Understanding To Complete Performance Index and TCPI Formula

The To-Complete Performance Index (TCPI) is a project management metric that shows you how efficiently your project team needs to perform to finish the remaining work within budget. You should calculate it when you need to find out if your project can still meet its financial targets, especially after experiencing cost variances.

This forward-looking indicator helps you assess the required cost performance for your project’s unfinished work so that you can make informed decisions about resource allocation and corrective actions.

When the TCPI is above one, it signals that your project is likely to go over its budget unless performance improves.

The Project Management Body of Knowledge (PMBOK Guide) by the Project Management Institute defines the To-Complete Performance Index as:

This metric helps project managers understand how efficient their project teams must be moving forward to stay within budget. You should use it when you need to assess whether your project’s cost objectives and management goals are achievable, as it compares the work remaining against your budget.

When doing the calculation, you’ll need to evaluate: Budget At Completion (BAC), Earned Value (EV), and Actual Cost (AC).

The formula varies depending on whether you’re measuring against your original budget (BAC) or a revised estimate (EAC).

The role of TCPI in project management is to help determine the required efficiency levels to complete your remaining project objectives within budget constraints.

This metric helps you allocate resources better while maintaining precise budget management controls. You can calculate it as the ratio of remaining work to available budget.

The metric is also used to estimate future cost performance and provide stakeholders with the numbers behind necessary adjustments or additional funds. TCPI also plays a very big part in managing earned value, you can use it to analyze cost variances, assess project health, and develop recovery plans when things are going south.

You should look at it as a key metric in guiding your decisions about budget realignment and cost efficiency measures.

The difference between CPI and TCPI is that CPI evaluates past project execution and identifies future trends, while TCPI calculates the level of cost efficiency needed to complete the project’s financial goals.

Both project management metrics serve distinct yet complementary purposes in effort measurement:

When you’re evaluating project health, CPI indicates whether you’re currently under or over budget, while TCPI tells you what efficiency level you’ll need to move forward. 

The TCPI formula is TCPI = (BAC – EV) / (BAC – AC). How you interpret the results will depend on whether the value is greater than, less than, or equal to 1, with values above 1 indicating that higher efficiency is needed to meet budget targets.

When you break down this formula, you’re measuring the gap between the remaining work and the remaining budget. The numerator (BAC – EV) represents work yet to be completed, while the denominator (BAC – AC) shows your remaining budget.

In the next section, we’ll teach you how to use this project management formula and interpret the results.

To calculate TCPI you need to follow a straightforward step-by-step process that uses the TCPI = (BAC – EV) / (BAC – AC) formula.

You’ll begin by identifying your Budget at Completion (BAC), which represents your project’s total approved budget. Next, calculate your Earned Value (EV) by determining the percentage of work completed and multiplying it by BAC.

Then, establish your Actual Cost (AC) by summing all expenses incurred. Finally, you’ll plug these values into the formula. In case you’re using EAC, substitute (EAC – AC) for the denominator.

When you’re analyzing the calculated values, there are three possible scenarios:

TCPI is particularly valuable for forecasting future performance needs, unlike CPI, which focuses on past execution. Below, we’ll give you more context for calculation and share two basic approaches.

Since project managers need reliable metrics to assess completion efficiency, they usually take the TCPI math approach using Budget at Completion (BAC) as a forecasting technique for earned value management.

Here, you’ll calculate TCPI by dividing the remaining work by the remaining budget using the formula (BAC – EV)/(BAC – AC).

Monitor results regularly – if the calculated values are above one, you need to improve execution ASAP.

The level above the BAC calculation is incorporating the Estimate at Completion (EAC) into the TCPI math. The enhanced formula using EAC is (BAC – EV) / (EAC – AC), which provides a more realistic assessment of the project’s execution level requirements.

This calculation is most useful in real-world scenarios.

For example, if your construction project has a BAC of $200,000, AC of $110,000, and EV of $80,000, you’d first calculate EAC as $230,000. Then, you can determine TCPI using EAC to evaluate the efficiency needed for successful project completion.

Project managers across different industries use these metrics to better understand and interpret targeted costs:

When you’re analyzing these scenarios, you’ll need to take into account multiple factors simultaneously. No worries, we’ll get back to real-world examples a bit later.

TCPI is mostly used in in project management when you’re evaluating whether your current performance can achieve the remaining project goals. You’ll want to develop thorough action plans based on TCPI calculations, incorporating resource adjustments, schedule modifications, and scope refinements to align with targeted completion metrics.

Your ongoing performance tracking should include regular assessments alongside other key performance indicators like CPI (Cost Performance Index) and SPI (Schedule Performance Index).

Project managers use TCPI during critical decision points, especially when they’re evaluating financial goals and execution efficiency.

The idea is to use it to detect early warning signs of cost overruns, evaluating risk impact on your budget, or when you need to realign resources to meet project objectives.

You should also implement this metric when you’re forecasting completion costs, developing mitigation strategies, or need to measure the efficiency required for remaining work. It’s important to use this metric in project management when you’re analyzing whether your project can still achieve its original budget targets or requires immediate corrective actions.

Effective action plans make successful project management. Solid plans start with establishing clear, SMART goals that align with your organization’s objectives while incorporating stakeholder feedback throughout the process.

When developing your action plan, you should break down objectives into manageable tasks and create realistic timelines with appropriate buffer periods.

Here you should:

Remember to maintain flexibility in your plan so that you have enough breathing room for changes. You also need to create regular feedback loops to identify improvement areas and adjust your strategy when needed.

Performance tracking is the base of measuring progress and guaranteeing successful outcomes. There are various tools and metrics to monitor your project’s health effectively.

You need to implement KPIs across schedule, budget, and quality dimensions, you’re able to make data-driven decisions and adjustments.

Modern project management software can help you automate this process, while collaboration platforms keep your team aligned and up to speed. Consistent tracking is the best way to identify potential risks early, optimize resource allocation, and maintain better control over your project’s trajectory toward success.

Implications of the performance index go way beyond simple cost tracking. This index provides a lot of context about essential areas of strategic decision-making and project governance. CPI considerably influences stakeholder relationships, team execution, and your project’s financial health.

Always remember that CPI isn’t just about numbers—it’s about ensuring financial viability. It also impacts market opportunities and operational effectiveness while maintaining focus on overall project success.

Predictive methods are a structured framework that relies heavily on thorough, upfront planning and careful execution.

This approach has sequential project phases, from initiation through closure, with detailed documentation guiding each step. When you’re implementing predictive project management, you’ll use special project management tools and techniques like Gantt charts, CPM, and WBS to maintain control over project deliverables.

Successful management depends on establishing fixed parameters for scope, budget, and timeline at the outset. While this method doesn’t include real-time changes once the project begins, it’s particularly effective when you’re dealing with well-defined requirements and stable project environments.

Building on the structured approach of predictive project management, effective decision-making strategies include both analytical frameworks and data-driven insights to guide organizational success.

You can use additional tools or methods to make even better-informed choices that align with your strategic objectives.

Since you can learn the most from real-life applications, here are two realistic examples of when and how to use the TCPI formulas. We’ll also add the logical conclusions and what they mean for the project.

Let’s say you’re leading a web redesign project for a client, and the total approved budget (BAC) is $100,000. You’ve been running the project for 6 weeks, and you’ve completed around 50% of the scope (EV = $50,000). However, due to unforeseen delays and some unexpected revisions, you’ve already spent $60,000 (AC).

The big question you need to find out is can your team still finish the redesign within the original $100,000 budget?

Let’s plug in the numbers to find out:

You now need to deliver 25% more value per dollar spent for the rest of the project. That’s a huge red flag. Either your team works significantly more efficiently (which may not be realistic), or you’ll go over budget.

Now that you got the bad news, you should consider the following options before it’s too late:

After doing a realistic forecast, you now estimate the project will end up costing $110,000 instead of $120,000 (your new EAC). You’re still at $50,000 EV and $60,000 AC.

Let’s recalculate using TCPI based on EAC:

You’re now on track to meet the updated forecast, as long as your team keeps up the current efficiency.

Additionally, you should:

The most common challenges of implementing TCPI measurement are inaccurate (or incomplete) project data, misunderstanding what the calculation actually tells you, calculating it too late, mixing up the cost formulas or using no PM tools to adjust calculations in real-time.

Below, we’ll go over each challenge and why it causes problems:

The best practices of implementing the TCPI are to use the right formulas for the right scenario, regularly monitoring the current cost-performance index, combining it with CPI for a more accurate insight and using PM software that has charts, visual dashboards and tracks historical project data.

Just like we did with the challenges, we’ll list the best practices with more context:

You’ll need to establish clear SMART objectives and set realistic targets that align with your organization’s goals. Make sure that you have accessible data collection systems and enough funds to support the implementation process.

When you’re tracking performance, use visual charts and perform regular reviews to keep up the effectiveness momentum. Don’t forget to develop actionable plans based on your results and remain adaptable to changes in the business environment.

Always be communicative with stakeholders throughout the process and maintain transparency.

When you systematically track your targeted cost performance index and compare it to your actual cost performance index, you’ll uncover opportunities for continuous improvement.

Aim to cultivate a culture of continuous enhancement (how to make something better all the time); you’ll create sustainable growth. To adapt to this way of thinking, you can:

Now that you understand this execution metric and its leading role in project management, you use it alongside CPI to better assess your project’s future performance requirements and make future cost efficiency improvements.

This index isn’t isn’t just a number – it’s a powerful tool that helps you determine the efficiency needed to meet your project’s goals and take corrective actions when necessary.

Additionally, make sure to use PM software and make your calculations more precise, actionable, realistic, and up-to-date. You can start by investing 30 minutes of your time and booking a short demo.