5th Edition PMBOK Guide–Chapter 7: Earned Value Management (part 4)


1.  Introduction

The last formula to be discussed is that relating to the 3rd technique listed for process 7.4 Control Costs, namely, the To-Complete Performance Index or TCPI.

What does index do for you?   Well, let’s say you are driving downtown and your GPS system tells you it will take 30 minutes to get there.   You notice that traffic is heavier than normal on the way, and 15 minutes into the journey you realize that you have only gotten a quarter of the way.   This means that for some reason you have been going twice as slow as the GPS estimated you would, perhaps because there was an accident on the freeway that caused the traffic to be heavier than predicted.

In any case, you can tell intuitively that, NOW in order to get downtown you would have to speed up, perhaps even greater than the speed limit, in order to make up for the slow performance in the first half of your trip.   This is analogous to what the TCPI does.  

If your CPI is less than 1.0, the TCPI can tell you what your CPI needs to be from here on out in order for you to either a) meet the cost baseline or b) to meet the estimate at completion.

Here is the first formula:

a.  TCPI = (BAC – EV)/(BAC – AC)

What does it mean?   The BAC – EV is the remaining work that needs to be done on the project.   BAC – EV is the remaining budget or funds with which that work must be done.   The resulting TCPI is the efficiency that must be maintained throughout the rest of the project in order for you to complete the project according to the plan.

b.  TCPI = (BAC – EV)/(EAC – AC)

In this formula, BAC – EV is the remaining work that needs to be done on the project, just as in the other formula.  In this case, however, BAC – AC is replaced with EAC – AC, and this is the remaining budget estimate or estimated funds with which that work must be done.   The resulting TCPI is the efficiency that must be maintained throughout the rest of the project in order for you to complete the project according to the EAC or estimate at completion.

Although I have not seen this formula on any PMP test questions, it is a good idea to at least understand conceptually what the formula is for and what its component terms are.

Tomorrow I will discuss some of the remaining tools & techniques for process 7.4 Control Costs.

 

 

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