As

indicated in the figure above, there are two scenarios for using TCPI, each

scenario requiring a slight deviation in the calculation.

The

first scenario employs a TCPI based on the authorized budget, i.e. Budget at

Completion. This is used to determine the required performance based on what

has been authorized in the form of an official budget. Once it becomes obvious

that the budget (or performance) is no longer achievable, the project

management team needs to determine how much money it will cost to complete work (called

the EACc). It is not uncommon for projects, when making a new EAC forecast, to

assume that everything will suddenly go right, and that all project risks are

behind them. Thus, an initial EACc may be unrealistic or unachievable.

Piecemeal EACs are often the norm, where the EACc projection goes up each month

as actual performance is known.

Considering

the above, the second scenario in using TCPI is to determine, and verify the

required future EACc. If the resulting TCPI based on the new EACc is higher or

much lower than the existing performance (CPI), it would be reasonable to

assume that the new EACc might not be accurate.

Using

the previous example, would an EACc requiring a future TCPI of 1.25 or 1.10 be

achievable? Probably not. More likely, a TCPI of 1.0 or 0.9 would be reasonable.

The new

EACc is assumed to be correct if the indexes are the same for both scenarios.

2.7.4 Forecasts

Forecasting

involves the calculation of a project’s Estimate at Completion (EAC) values.

The EAC values should represent the total project considering performance

(actual) to date, plus future estimate to completion (ETC).

Compare this

EAC information with the performance measurement baseline to identify the

current variances from the plan, important to management and any applicable

customer reporting requirements.

The EAC Calculations

consist of the following forecasts to consider:

·

Estimate

at Completion (EAC) – Bottom up.

·

Independent

Estimate at Completion for Cost (IEACc).

2.7.4.1 Estimate at Completion – Bottom Up

Estimate at

Completion using the bottom up approach (also referred to as a formal EAC),

should be based on the following:

·

The full

period of the project.

·

Represents

a complete review of the plan to complete the project.

·

Consists

of the actual costs to date plus the Estimate to Complete (ETC).

·

Performed

at the work package and planning package level of the control account.

·

Includes a

review of the remaining scope of work and the schedule for completing the

remaining scope of work.

·

Includes

all approved change control since the last EAC and considers selected identified

early warning issues.

·

Includes a

complete re-evaluation of project risks, including technical, schedule, and

cost contingency.

2.7.4.2 Independent

Estimate at Completion for Cost

An

Independent Estimate at Completion for Cost provides a statistical final cost

indication. It should only be considered as a “Reasonableness Test” and does

not replace the Bottom up EAC.

To calculate

Independent Estimate at Completion (IEAC) the following three variables are

required:

·

Total of

actual costs to date.

·

Cost value

of work remaining for uncompleted tasks (BAC – EV).

·

Division

of the remaining work by some performance efficiency factor, which is used to

produce a range of EACs.

The following

should be considered when using IEAC calculations:

·

IEAC should

not be your final EAC.

·

IEAC can

be used for comparative analysis.

·

IEAC tests

thinking only.