Definition:
A measure of cost efficiency needed to complete the project within budget.
TCPI=(BAC−EV) / (EAC – AC)
Key Components:
- Budget at Completion (BAC): Original planned budget.
- Earned Value (EV): Work completed to date.
- Required Cost Efficiency: Determines how efficiently remaining work must be completed.
Use Cases/Industries:
- Construction: Evaluating cost control strategies for project recovery.
- Energy Sector: Identifying cost-saving measures to stay within budget.
- IT Projects: Adjusting spending for software development efforts.
Advantages:
- Provides insight into whether a budget target is realistic.
- Helps adjust project spending plans.
- Aids in contract compliance monitoring.
Challenges:
- Can be misleading if past cost trends are not considered.
- Requires accurate Earned Value tracking.
Related Terms:
Cost Performance Index, Estimate at Completion, Planned Value
Example:
A TCPI greater than 1.0 means future work must be performed more efficiently than past work to stay within budget.
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Synonyms:
Required Cost Efficiency, Budget Recovery Rate, Remaining Cost Performance Index
