Earned Value Management – TCPI(E) & CPI

The power of Earned Value data lies in the forecast data that can be used to challenge and indicate the likely out turn cost of a project on completion.

TCPI(E) stands for Target Cost Performance Index (Estimate), the value derived from the TCPI(E) formula indicates the level of efficiency from the reporting period to the completion of the project that the project requires to achieve to meet the forecasted Estimate At Completion.

The formula for TCPI(E) is:

TCPI(E) = (Budget At Complete – Budgeted Cost of Work Performed)/(Estimate At Complete – Actual Cost of Work Performed)

It is important to use the TCPI(E) value in conjunction with the trend of the CPI value to assess if the TCPI(E) value is achievable given past performance. If it is considered not to be then the Estimate At Complete (EAC) may require revision.

For example if the CPI has historically trended around 0.65 and the TCPI(E) is indicating that to achieve the EAC there needs to be an increase to 1.28 from this point forward then what is the likelihood of achieving this? If this is not likely then the EAC would need to be revisited.

For further articles on Earned Value Management and other Project Control articles please visit our blog on our website www.myxacom.com where knowledge is no weight to carry.

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