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To Complete Performance Index (TCPI)

APMT 064

DAU GLOSSARY DEFINITION

Alternate Definition

The To Complete Performance Index (TCPI) is an Earned Value Management (EVM) metric computed by dividing the value of the work remaining by the value of the target cost remaining. The target cost remaining value is tied to some financial goal set by management (e.g. Estimate at Completion, or Budget at Completion). The TCPI metric represents the cost efficiency from the present time till the end of the contract required to achieve management’s target goal.

General Information

The to complete performance index (TCPI) is a comparative EVM metric used primarily to determine if an independent Estimate at Completion (EAC) is reasonable. It computes the future required cost efficiency needed to achieve a target EAC . The TCPI is computed by dividing Budgeted Cost of Work Remaining (BCWR) , which is represented by subtracting the cumulative Budgeted Cost for Work Performed (BCWP) from the Budget at Completion (BAC), by the target cost remaining, which is represented by subtracting the cumulative Actual Cost of Work Performed (ACWP) from the target value. (The "target" used in the denominator could be the BAC, the contractor EAC or a government calculated EAC.)

 

TCPI target = (BAC - BCWPcum)/('target' value - ACWPcum)

 

The TCPI is compared to the cumulative Cost Performance Index (CPI) , the cost efficiency the contractor has achieved, to determine if a target value is reasonable. A target value is assumed to be reasonable, if the TCPI is within plus or minus 0.1 of the cumulative CPI EVM metric. If a TCPI is more than 0.1 higher than the cumulative CPI the target EAC may be overly optimistic. If the cum CPI is more than 0.1 higher than the TCPI , the target EAC may be overly conservative.

 

Given a TCPI of 1.1, the plain language definition is: the contractor needs to perform at a cost efficiency of 110% from now to the end of the contract to achieve the target EAC ; likewise a TCPI of 0.95 would be: the contractor needs to perform at a cost efficiency of 95% from now to the end of the contract to achieve the target EAC . In order to make TCPI meaningful, it needs to be compared with the CPI which is the efficiency the contractor has actually demonstrated to determine if the TCPI is achievable.

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