Learn The Right Way To Apply TCPI Formulas In Project Management
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The document discusses the To Complete Performance Index (TCPI), which is a measure of the future projected cost efficiency needed to complete the remaining work of a project within its original or revised budget. It provides definitions of TCPI and contrasts it with Cost Performance Index (CPI). An example project is used to demonstrate how to calculate TCPI using formulas that take the budget at completion (BAC), actual costs (AC), earned value (EV), and estimate to complete (ETC) into account. Formulas are presented for calculating TCPI based on the original budget and when the budget has been revised.
Learn The Right Way To Apply TCPI Formulas In Project Management
- 1. To Complete Performance Index TCPI FORMULAS IN PROJECT MANAGEMENT
- 2. Agenda Explanation & Definitions Understanding TCPI Through Example TCPI Formulas DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 2
- 3. Agenda Explanation & Definitions Understanding TCPI Through Example TCPI Formulas DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 3
- 4. Project Cost Efficiency Project Cost Efficiency can be defined as the ratio of work to cost. Work could be Completed Work or Remaining Work. (in appropriate units) Cost could be used up money or remaining money. (in dollars or any other monetary unit) DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 4 Project Cost Efficiency = Work / Cost
- 5. Two Cost Efficiencies - CPI v/s TCPI CPI – COST PERFORMANCE INDEX Project’s current cost efficiency. Actual cost efficiency of completed work. CPI = EV/AC TCPI – TO COMPLETE PERFORMANCE INDEX Project’s future cost efficiency. Projected cost efficiency of remaining work. To be determined…. DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 5 COMPLETED REMAINING TOTAL PROJECT SCOPE/WORK CPI TCPI ? Reference https://www.pmbypm.com/basics-earned-value-analysis/ https://www.slideshare.net/pmalik2/101-a-beginners-guide-to-earned-value-management
- 6. TCPI Definition It is a measure of the cost performance that is required to be achieved with the remaining resources in order to meet a specified management goal, expressed as the ratio of the cost to finish the outstanding work to the remaining budget. Future projected cost efficiency to complete the project within original or revised project budget. DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 6 PMBOK Guide
- 7. Graphical Representation Of A Project DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 7 Control Date Time CumulativeCost EAC BAC AC PV EV
- 8. Agenda Explanation & Definitions Understanding TCPI Through Example TCPI Formulas DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 8
- 9. Project Plan – Example Project DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 9 Project Scope Build 80 Tables Project Time Estimate (Duration) 5 Days Cost Estimate Per Table $1000 Project Cost (Budget) $1000*80 = $80000 Reference https://www.pmbypm.com/basics-earned-value-analysis/ https://www.slideshare.net/pmalik2/101-a-beginners-guide-to-earned-value-management
- 10. Project Status – Example Project CPI = EV/AC = 35000/36000 = 0.97 DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 10 Work No. of Tables Cost Monetary Value Total 80 BAC or EAC 80*$1000 = $80000 Completed 35 $36000 (AC) 35*$1000 = $35000 (EV) Remaining 45 (80-35) ETC 45*$1000 = $45000 TCPI = Remaining Work/Remaining Funds = 45000/(80000-36000) = 1.02 If CPI < 1 then, TCPI needs to be greater than 1 in order to complete the remaining work within the original project budget
- 11. Calculating TCPI DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 11 TCPI = (monetary value of remaining work)/(remaining funds) COMPLETED REMAINING TOTAL PROJECT SCOPE/WORK CPI TCPI ?
- 12. Calculating TCPI Monetary value of remaining work = monetary value of total work – monetary value of completed work Monetary value of remaining work = BAC – EV DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 12 TCPI = (monetary value of remaining work)/(remaining funds) EV REMAINING BAC
- 13. Calculating TCPI Monetary value of remaining work = monetary value of total work – monetary value of completed work Monetary value of remaining work = BAC – EV Remaining funds = total budget – actual expenditure Remaining funds = BAC – AC DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 13 TCPI = (monetary value of remaining work)/(remaining funds)
- 14. Agenda Explanation & Definitions Understanding TCPI Through Example TCPI Formulas DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 14
- 15. TCPI Formulas If Sponsor decides to revise the Project Budget to EAC, the formula becomes DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 15 TCPIB = (BAC – EV) / (BAC – AC) TCPIE = (BAC – EV) / (EAC – AC)
- 16. Calculations TCPIB = (80000 – 35000) / (80000 – 36000) TCPIB = 1.02 If Budget imposed by Sponsor is $78000 EAC = $78000 TCPIE = ($80000 – $35000) / ($78000 – $36000) TCPIE = 1.07 DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 16
- 17. YOUR OPINION IS IMPORTANT TO US FOR ANY QUESTIONS OR SUGGESTIONS CONTACT US @ HTTPS://WWW.PMBYPM.COM/CONTACT-PRAVEEN-MALIK/ DESIGNED AND DEVELOPED BY WWW.PMBYPM.COM | COPYRIGHT 2018 17