Earned Value Management Advanced Calculations: TCPI, VAC, and EAC Formulas

Moving Beyond Basic EVM

If you can calculate CPI, SPI, CV, and SV, you have the foundation of earned value management. But the PMP exam pushes further. It tests your ability to apply advanced EVM calculations that project managers use to forecast project outcomes and determine what performance is needed to meet objectives. These calculations separate candidates who memorized definitions from those who truly understand the math and its practical application.

Quick Review of Foundational EVM

Before diving into advanced calculations, confirm your grasp of the basics:

PV (Planned Value): The authorized budget for work scheduled to be completed by a given date
EV (Earned Value): The authorized budget for work actually completed by a given date
AC (Actual Cost): The actual cost incurred for work completed by a given date
BAC (Budget at Completion): The total authorized budget for the project
CPI (Cost Performance Index): EV / AC (efficiency of cost utilization)
SPI (Schedule Performance Index): EV / PV (efficiency of time utilization)

With these foundations solid, let's tackle the advanced calculations.

Estimate at Completion (EAC) — Four Variations

EAC answers: "Based on current performance, what will the project cost when it's done?" The PMP exam tests four variations, and you must know when to use each one.

Variation 1: Bottom-Up EAC

Formula: AC + Bottom-Up ETC

When to use: When the original estimate is fundamentally flawed and a completely new estimate is needed for the remaining work. The project team re-estimates every remaining work package from scratch.

Variation 2: EAC Using CPI

Formula: BAC / CPI

When to use: When current cost performance is expected to continue for the remainder of the project. Past variances are considered typical of future performance. This is the most commonly tested variation.

Variation 3: EAC Using CPI and SPI

Formula: AC + [(BAC - EV) / (CPI x SPI)]

When to use: When both cost performance and schedule performance are expected to influence future spending. This formula accounts for the cost impact of schedule delays (or acceleration).

Variation 4: EAC Assuming Original Estimate

Formula: AC + (BAC - EV)

When to use: When current variances are considered atypical and future performance is expected to match the original plan. The variance was a one-time event, not a trend.

Variance at Completion (VAC)

Formula: BAC - EAC

VAC tells you how much over or under budget the project is expected to be when complete. A positive VAC means the project is projected to finish under budget. A negative VAC indicates a projected overrun.

Exam tip: Calculate EAC first, then subtract from BAC to find VAC. The exam may give you enough information to calculate EAC and ask for VAC, requiring a two-step calculation.

To-Complete Performance Index (TCPI)

TCPI answers: "What cost performance is needed on remaining work to meet a specific financial target?" There are two versions:

TCPI Based on BAC

Formula: (BAC - EV) / (BAC - AC)

Interpretation: "What CPI must we achieve on remaining work to finish within the original budget?"

TCPI Based on EAC

Formula: (BAC - EV) / (EAC - AC)

Interpretation: "What CPI must we achieve on remaining work to finish within the revised budget (EAC)?"

Interpreting TCPI

TCPI greater than 1.0: You must be more efficient than average on remaining work. The higher above 1.0, the harder it becomes.
TCPI equal to 1.0: You need to perform at plan on remaining work.
TCPI less than 1.0: You can be less efficient than plan on remaining work and still meet the target.

Exam tip: When TCPI based on BAC is significantly above 1.0 (say 1.5 or higher), the original budget is likely unreachable. The question may then ask about requesting additional funding or revising the EAC.

Worked Example

A project has the following data: BAC = $500,000, PV = $200,000, EV = $180,000, AC = $210,000.

CPI = $180,000 / $210,000 = 0.857
SPI = $180,000 / $200,000 = 0.90
EAC (using CPI) = $500,000 / 0.857 = $583,430
EAC (using CPI x SPI) = $210,000 + [($500,000 - $180,000) / (0.857 x 0.90)] = $210,000 + [$320,000 / 0.771] = $210,000 + $414,916 = $624,916
VAC (based on CPI EAC) = $500,000 - $583,430 = -$83,430 (projected overrun)
TCPI (based on BAC) = ($500,000 - $180,000) / ($500,000 - $210,000) = $320,000 / $290,000 = 1.103

The TCPI of 1.103 means the team needs to achieve a CPI of 1.103 on all remaining work to finish on budget — a 10% improvement in efficiency, which may or may not be realistic.

Master These Formulas

EVM calculations are among the most predictable questions on the PMP exam. If you know the formulas and when to apply each one, these are free points. Use the PMPprep formula cheat sheets for at-a-glance reference, and practice calculations repeatedly in the exam simulator until the formulas are second nature.