How is TCPI calculated when a project is over-budget and a new estimated cost at completion is approved?

The correct formula for calculating TCPI (To-Complete Performance Index) when a project is over-budget and a new estimated cost at completion (EAC) is approved is represented by the choice where TCPI is computed as (BAC - EV) / (EAC - AC).

In this scenario, BAC (Budget at Completion) represents the total original budget of the project, while AC (Actual Cost) is the amount that has already been spent, and EV (Earned Value) indicates the value of work actually performed up to that point. When a project runs over budget, it becomes necessary to re-evaluate the completion strategy, leading to an adjusted EAC.

The TCPI reflects the cost performance required moving forward to complete the project within the newly established budget limits. By using the correct formula, you're essentially assessing the necessary cost efficiency to finish the remaining work (BAC - EV) relative to the remaining budget allocation (EAC - AC). This allows project managers to gauge whether the performance going forward can meet the new financial constraints set by the updated EAC, facilitating better-informed decision-making about resource allocation and project adjustments to meet the new target.

This understanding highlights how TCPI is a crucial metric in project performance management, especially during scenarios