Study guide
12.2 To-Complete Performance Index (TCPI) & Variance at Completion (VAC)
AACE Certified Cost Professional CCP
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1 Chapter 1: Introduction & Total Cost Management (TCM) Framework
1.1 AACE CCP Exam Structure, Eligibility & the In-Exam Memo 1.2 The Total Cost Management (TCM) Framework & PDCA Cycle 1.3 Strategic Asset Management vs. Project Control Processes
2 Chapter 2: Cost Estimating Fundamentals & Classification
2.1 AACE Recommended Practice 18R-97 Estimate Classification System 2.2 Direct vs. Indirect Costs and Cost Element Breakdown 2.3 Quantity Takeoff, Standard Cost Databases & Pricing Sources
3 Chapter 3: Conceptual & Parametric Estimating Techniques
3.1 Capacity Factoring & the Six-Tenths Rule 3.2 Parametric Estimating, Lang Factors & Hand Factors 3.3 Cost Indices, Location Adjustments & Escalation Modeling
4 Chapter 4: Cost Engineering Economics & Time Value of Money
4.1 Simple & Compound Interest, Equivalence & Cash Flow Diagrams 4.2 Discrete Compounding Formulas & Uniform Series Factors 4.3 Nominal vs. Effective Interest Rates & Continuous Compounding
5 Chapter 5: Project Profitability & Capital Investment Decision-Making
5.1 Net Present Value (NPV) & Present Worth Analysis 5.2 Internal Rate of Return (IRR) & Incremental IRR Analysis 5.3 Payback Period, Benefit-Cost Ratio (BCR) & Breakeven Analysis
6 Chapter 6: Depreciation Methods, Taxes & Asset Valuation
6.1 Classical Depreciation Methods (Straight-Line, DDB, Sum-of-Years-Digits) 6.2 Modified Accelerated Cost Recovery System (MACRS) & Tax Shield 6.3 After-Tax Cash Flow Analysis & Asset Replacement Economics
7 Chapter 7: Project Scope, Work Breakdown Structure (WBS) & Baselines
7.1 Work Breakdown Structure (WBS) Principles & the 100% Rule 7.2 Organizational Breakdown Structure (OBS) & Control Accounts 7.3 Establishing the Performance Measurement Baseline (PMB)
8 Chapter 8: Critical Path Method (CPM) Planning & Scheduling Logic
8.1 Precedence Diagramming Method (PDM) & Dependency Relationships 8.2 Forward Pass, Backward Pass & Float Calculations (Total vs. Free Float) 8.3 Schedule Baseline Development, Calendar Constraints & Milestones
9 Chapter 9: Schedule Optimization, Compression & Probabilistic PERT
9.1 Schedule Crashing & Least-Cost Slope Optimization 9.2 Fast-Tracking Risks, Overlap Analysis & Execution Strategies 9.3 PERT Three-Point Estimating & Probabilistic Duration Variance
10 Chapter 10: Resource Management, Productivity & Learning Curves
10.1 Resource Loading, Leveling vs. Resource Smoothing 10.2 Labor Productivity Factors, Work Sampling & Efficiency Loss 10.3 Learning Curve Theory (Wright Cumulative vs. Crawford Unit Models)
11 Chapter 11: Earned Value Management (EVM) Core Principles & Metrics
11.1 ANSI/EIA-748 EVM Framework & Core Metrics (PV, EV, AC) 11.2 EVM Variances & Performance Indices (CV, SV, CPI, SPI) 11.3 Work Progress Measurement Techniques (0/100, 50/50, Milestone Weighting)
12 Chapter 12: EVM Forecasting, Indices & Baseline Change Control
12.1 Estimate at Completion (EAC) & Estimate to Complete (ETC) Formulas 12.2 To-Complete Performance Index (TCPI) & Variance at Completion (VAC) 12.3 Integrated Change Control, Baseline Revisions & Trend Management
13 Chapter 13: Risk Management Planning & Qualitative Risk Analysis
13.1 Risk Management Framework & Risk Breakdown Structure (RBS) 13.2 Qualitative Risk Assessment & Probability-Impact (P-I) Matrix 13.3 Risk Response Strategies & Threat/Opportunity Management
14 Chapter 14: Quantitative Risk Analysis, Monte Carlo & Contingency Estimating
14.1 Expected Monetary Value (EMV) & Decision Tree Analysis 14.2 Monte Carlo Simulation & Probability Distributions in Cost/Schedule 14.3 Contingency Estimating & AACE Recommended Practice 40R-08
15 Chapter 15: Contract Types, Procurement Strategy & Commercial Terms
15.1 Contract Types & Risk Allocation (Firm Fixed Price, Cost-Plus, T&M) 15.2 Project Delivery Systems & Procurement Lifecycle (DBB, DB, EPC, CMAR) 15.3 Commercial Terms, Bonds, Retainage & Claims Management
16 Chapter 16: Quality Management, Value Engineering & Technical Communication
16.1 Quality Management & Cost of Quality (CoQ) 16.2 Value Engineering, Function Analysis System Technique (FAST) & Life Cycle Costing 16.3 The CCP Memo, Cost Report Writing, Data Presentation & AACE Ethics 16.4 AACE CCP Capstone Review & High-Yield Exam Strategies
17 Chapter 17: Cost Accounting, Budget Administration & Cost System Governance
17.1 Historical Cost Databases, Data Organization & Benchmarking 17.2 Committed Costs, Accruals, Work-in-Place & Invoice Validation 17.3 Budget Creation, Operating Budgets & Funding Requirement Forecasting 17.4 Cost System Governance, the Code of Accounts & Preserving Project Controls Data
18 Chapter 18: Estimate Preparation, Review & Cost Driver Analysis
18.1 ROM, Summary-Level and Detailed Estimates: Preparing and Reviewing 18.2 Verifying the Basis of Estimate & Analyzing Estimates 18.3 Cost Drivers, Change Order Impact & Resource Utilization Analysis
19 Chapter 19: Interfacing with Other Disciplines & Stakeholders
19.1 Coordinating with Internal Disciplines & Supporting Project Leadership 19.2 Communicating Cost Estimates and Cost/Schedule Key Performance Indicators 19.3 Supporting Tenders, Procurement, Audits, Field Verification & Recovery
20 Chapter 20: Cost Reporting, Dashboards & Profitability Analysis
20.1 Cost Reports, Performance Dashboards & the Reporting Cycle 20.2 Variance Reports & Explaining Project Financial Health 20.3 Profit Margin Analysis & Profitability Enhancement
21 Chapter 21: Cost Support to Scheduling & the CCP Exam Memo
21.1 Cost and Resource Loading Summaries from the Project Schedule 21.2 Translating Schedule Change into Cost Impact 21.3 Writing the CCP Exam Memo: A Worked Domain 7 Walkthrough
12.2 To-Complete Performance Index (TCPI) & Variance at Completion (VAC)
Key Takeaways Explain This Topic AI
Variance at Completion (VAC = BAC - EAC) quantifies the forecasted final cost variance, where a negative VAC indicates an expected budget overrun and a positive VAC denotes a budget underrun.
The To-Complete Performance Index (TCPI) is the calculated cost performance efficiency that must be achieved on all remaining work packages to meet a specified financial management target (BAC or EAC).
The target-BAC formula (TCPI_BAC = (BAC - EV) / (BAC - AC)) determines the future cost efficiency required to recover from past overruns and finish within the original approved baseline budget.
The target-EAC formula (TCPI_EAC = (BAC - EV) / (EAC - AC)) determines the required future efficiency to finish within an approved revised cost ceiling; comparing TCPI_EAC against cumulative CPI is the primary EVMS test for EAC feasibility.
If TCPI_EAC exceeds cumulative CPI by more than 0.10 (10 percentage points), or if TCPI exceeds 1.10, the forecast is considered statistically and operationally unachievable under standard industry benchmarks without structural scope reduction.
Last updated: August 2026
12.2 To-Complete Performance Index (TCPI) & Variance at Completion (VAC)
Beyond the forecasting mathematics, this section carries 4.M recommend performance improvements (e.g., change orders, performance to-date) . TCPI is precisely the tool the blueprint has in mind: it converts "we are behind" into the specific efficiency the remaining work must achieve, which is what a defensible recommendation has to state.
In Earned Value Management, generating an Estimate at Completion (EAC) is only half of the forecasting equation. Project managers, cost engineers, and executive sponsors must validate whether a proposed EAC is operationally achievable or represents wishful thinking.
Under the AACE International Total Cost Management framework, this validation is performed using Variance at Completion (VAC) and the To-Complete Performance Index (TCPI) . TCPI is widely recognized by project controls professionals as the ultimate reality check in cost engineering, converting abstract financial forecasts into actionable productivity targets for project execution teams.
1. Variance at Completion (VAC) Fundamentals
Variance at Completion (VAC) represents the forecasted financial variance between the total approved budget and the expected final cost at the completion of all authorized project scope. +-----------------------------------------------------------------------------+
- | VARIANCE AT COMPLETION (VAC) |
- | |
- | Mathematical Formula: VAC = BAC - EAC |
- | |
- | VAC Percentage: VAC% = (VAC / BAC) * 100 |
- | |
- | INTERPRETATION: |
- | - VAC > 0 (Positive): Favorable (Projected Final Cost Underrun) |
- | - VAC = 0 (Zero): On Target (Projected to Finish Exactly on BAC)|
- | - VAC < 0 (Negative): Unfavorable (Projected Final Cost Overrun) |
- +-----------------------------------------------------------------------------+
- Distinction Between Cost Variance ( C V CV C V ) and Variance at Completion ( V A C VAC V A C )
Cost Variance ( C V = E V − A C CV = EV - AC C V = E V − A C ): A backward-looking, historical metric that measures cost efficiency from project inception to the current status date. It reflects the sunk cost overrun or underrun realized to date.
Variance at Completion ( V A C = B A C − E A C VAC = BAC - EAC V A C = B A C − E A C ): A forward-looking, predictive metric that projects the net financial delta at the conclusion of 100% of the project scope. If E A C > B A C EAC > BAC E A C > B A C , V A C VAC V A C is negative, indicating that the project will require additional authorization of funds.
2. To-Complete Performance Index (TCPI) Mechanics
The To-Complete Performance Index (TCPI) is defined as:
The calculated ratio of remaining work to remaining available financial resources, representing the cost performance efficiency that must be maintained on all remaining uncompleted work to achieve a specific management financial target. Conceptual Formula: TCPI = Budgeted Cost of Work Remaining (BCWR) Estimated Available Funds Remaining = Work Remaining Funds Remaining \text{Conceptual Formula:}\quad \text{TCPI} = \frac{\text{Budgeted Cost of Work Remaining (BCWR)}}{\text{Estimated Available Funds Remaining}} = \frac{\text{Work Remaining}}{\text{Funds Remaining}} Conceptual Formula: TCPI = Estimated Available Funds Remaining Budgeted Cost of Work Remaining (BCWR) = Funds Remaining Work Remaining
While the historical Cost Performance Index ( C P I = E V / A C CPI = EV / AC CP I = E V / A C ) measures what the project team has achieved , the T C P I TCPI TCP I defines what the team must achieve from the status date forward. +-----------------------------------------------------------------------------+
- | THE TWO TCPI TARGET FORMULATIONS |
- | |
- | TARGET 1: ORIGINAL BASELINE BUDGET (BAC) |
- | TCPI_BAC = (BAC - EV) / (BAC - AC) |
- | Used when management requires full recovery of past overruns. |
- | |
- | TARGET 2: REVISED ESTIMATE AT COMPLETION (EAC) |
- | TCPI_EAC = (BAC - EV) / (EAC - AC) |
- | Used when BAC is unachievable and a new financial ceiling is set|
- +-----------------------------------------------------------------------------+
- Target 1: Meeting the Original Budget at Completion ( T C P I BAC TCPI_{\text{BAC}} TCP I BAC )
When executive management, owners, or government agencies refuse to authorize budget increases, the project team is mandated to complete all remaining work within the original approved B A C BAC B A C . T C P I BAC = B A C − E V B A C − A C TCPI_{\text{BAC}} = \frac{BAC - EV}{BAC - AC} TCP I BAC = B A C − A C B A C − E V
Numerator ( B A C − E V BAC - EV B A C − E V ): The baseline budgeted value of all remaining, uncompleted work packages.
Denominator ( B A C − A C BAC - AC B A C − A C ): The remaining unspent funds within the original budget allocation.
The Singularity Condition ( A C ≥ B A C AC \ge BAC A C ≥ B A C ):
If a project experiences severe cost overruns such that actual expenditures equal or exceed the total budget ( A C ≥ B A C AC \ge BAC A C ≥ B A C ) before all work is earned ( E V < B A C EV < BAC E V < B A C ):
The denominator becomes zero or negative ( B A C − A C ≤ 0 BAC - AC \le 0 B A C − A C ≤ 0 ).
Mathematically, T C P I BAC TCPI_{\text{BAC}} TCP I BAC is infinite or negative.
Operationally, this indicates that completing the project within the original BAC is 100% physically and financially impossible , because zero baseline funds remain to execute the remaining unearned scope. In such cases, T C P I BAC TCPI_{\text{BAC}} TCP I BAC ceases to be meaningful, and project controls must transition to T C P I EAC TCPI_{\text{EAC}} TCP I EAC .
Target 2: Meeting an Approved Revised Forecast ( T C P I EAC TCPI_{\text{EAC}} TCP I EAC )
When a project overruns its original budget and management acknowledges that B A C BAC B A C cannot be recovered, an approved revised Estimate at Completion ( E A C EAC E A C ) is established as the new financial baseline. The cost engineer must determine the required efficiency to meet this revised ceiling: T C P I EAC = B A C − E V E A C − A C TCPI_{\text{EAC}} = \frac{BAC - EV}{EAC - AC} TCP I EAC = E A C − A C B A C − E V
Numerator ( B A C − E V BAC - EV B A C − E V ): The baseline budgeted value of all remaining work.
Denominator ( E A C − A C EAC - AC E A C − A C ): The revised remaining funds available to complete the project ( E T C ETC ETC ).
3. Interpreting TCPI Values & The Feasibility Threshold Matrix
Understanding how to interpret numerical TCPI values is a core competency tested on the CCP exam: +-----------------------------------------------------------------------------+
- | TCPI VALUE INTERPRETATION SPECTRUM |
- | |
- | TCPI < 1.00 --> LESS EFFICIENT THAN PLANNED |
- | Remaining work can be executed at lower efficiency than |
- | originally budgeted. Project has financial cushion. |
- | |
- | TCPI = 1.00 --> EXACT BASELINE PLANNED RATE |
- | Remaining work must achieve exactly $1.00 of EV for |
- | every $1.00 spent to hit the target. |
- | |
- | TCPI > 1.00 --> MORE EFFICIENT THAN PLANNED |
- | Remaining work must achieve higher efficiency than |
- | originally planned ($1.00 EV requires < $1.00 spend). |
- | |
- | TCPI > 1.10 --> EMPIRICAL UNFEASIBILITY THRESHOLD |
- | Demands > 10% efficiency improvement over baseline. |
- | Historically unachievable without scope reduction. |
- +-----------------------------------------------------------------------------+
- The CPI vs. TCPI Gap Analysis (The Feasibility Reality Check)
In professional cost auditing (e.g., Defense Contract Management Agency / DCMA, Department of Energy, and AACE project reviews), cost analysts compare the historical cumulative C P I CPI CP I against the forward-looking T C P I EAC TCPI_{\text{EAC}} TCP I EAC to test the validity of a contractor's proposed EAC: Feasibility Gap = T C P I EAC − C P I cumulative \text{Feasibility Gap} = TCPI_{\text{EAC}} - CPI_{\text{cumulative}} Feasibility Gap = TCP I EAC − CP I cumulative +-----------------------------------------------------------------------------+
- | EAC FEASIBILITY DECISION RULES |
- | |
- | 1. |TCPI_EAC - CPI_cum| <= 0.05: |
- | EAC is highly realistic and mathematically consistent with current |
- | performance trends. |
- | |
- | 2. 0.05 < (TCPI_EAC - CPI_cum) <= 0.10: |
- | EAC is moderately aggressive; requires specific management corrective |
- | action plans (e.g., labor re-tooling, process improvement) to justify. |
- | |
- | 3. (TCPI_EAC - CPI_cum) > 0.10: |
- | EAC is UNREALISTIC / OVERLY OPTIMISTIC. Empirical data indicates that |
- | troubled projects cannot improve cost efficiency by > 10 percentage |
- | points without fundamental re-scoping or contract modification. |
- | |
- | 4. TCPI_EAC == CPI_cum: |
- | Occurs when EAC = BAC / CPI (The Typical Forecast). The required future|
- | efficiency exactly equals the demonstrated past efficiency. |
- +-----------------------------------------------------------------------------+
- 4. Statistical EAC Range Analysis & Independent Estimates at Completion (IEAC)
To prevent reliance on a single point forecast, cost engineers develop an Independent Estimate at Completion (IEAC) range using statistical formulas to define the bounds of financial risk: +-----------------------------------------------------------------------------+
- | STATISTICAL IEAC BOUNDING RANGE |
- | |
- | BEST-CASE FLOOR (IEAC_min) = AC + (BAC - EV) [Atypical Model] |
- | MOST LIKELY (IEAC_mid) = BAC / CPI [Typical Model] |
- | WORST-CASE CEIL (IEAC_max) = AC + (BAC - EV)/(CPI*SPI) [Composite] |
- +-----------------------------------------------------------------------------+
- Schedule-Adjusted Forecasting: Earned Schedule ( E S ES ES ) & E A C t EAC_t E A C t
In modern EVM standards, forecasting is extended to project duration using Earned Schedule (ES) metrics:
Schedule Performance Index (Time) ( S P I t SPI_t SP I t ): S P I t = E S / A T SPI_t = ES / AT SP I t = ES / A T , where A T AT A T is Actual Time.
Time-Based Estimate at Completion ( E A C t EAC_t E A C t ): E A C t = Planned Duration / S P I t EAC_t = \text{Planned Duration} / SPI_t E A C t = Planned Duration / SP I t .
5. Comprehensive Worked Step-by-Step Engineering Case Study
Refinery Hydrocracker Revamp Project Data:
Approved Baseline Budget ( B A C BAC B A C ): $40,000,000
Status Date (Month 10 of 18):
- Planned Value ( P V PV P V ): $25,000,000
- Earned Value ( E V EV E V ): $20,000,000
- Actual Cost ( A C AC A C ): $25,000,000
Contractor Proposal: Contractor submits a revised EAC of $44,000,000 .
Step 1: Compute Current Historical Performance Indices
Cost Performance Index ( C P I CPI CP I ): C P I = E V A C = $ 20 , 000 , 000 $ 25 , 000 , 000 = 0.800 CPI = \frac{EV}{AC} = \frac{\$20,000,000}{\$25,000,000} = 0.800 CP I = A C E V = $25 , 000 , 000 $20 , 000 , 000 = 0.800
Schedule Performance Index ( S P I SPI SP I ): S P I = E V P V = $ 20 , 000 , 000 $ 25 , 000 , 000 = 0.800 SPI = \frac{EV}{PV} = \frac{\$20,000,000}{\$25,000,000} = 0.800 SP I = P V E V = $25 , 000 , 000 $20 , 000 , 000 = 0.800
Cost Variance ( C V CV C V ): C V = E V − A C = $ 20 , 000 , 000 − $ 25 , 000 , 000 = − $ 5 , 000 , 000 CV = EV - AC = \$20,000,000 - \$25,000,000 = -\$5,000,000 C V = E V − A C = $20 , 000 , 000 − $25 , 000 , 000 = − $5 , 000 , 000
Work Remaining ( B A C − E V BAC - EV B A C − E V ): Work Remaining = $ 40 , 000 , 000 − $ 20 , 000 , 000 = $ 20 , 000 , 000 \text{Work Remaining} = \$40,000,000 - \$20,000,000 = \$20,000,000 Work Remaining = $40 , 000 , 000 − $20 , 000 , 000 = $20 , 000 , 000
Step 2: Evaluate Feasibility of Finishing Within Original B A C BAC B A C Available Funds Remaining under BAC = B A C − A C = $ 40 , 000 , 000 − $ 25 , 000 , 000 = $ 15 , 000 , 000 \text{Available Funds Remaining under BAC} = BAC - AC = \$40,000,000 - \$25,000,000 = \$15,000,000 Available Funds Remaining under BAC = B A C − A C = $40 , 000 , 000 − $25 , 000 , 000 = $15 , 000 , 000 T C P I BAC = B A C − E V B A C − A C = $ 20 , 000 , 000 $ 15 , 000 , 000 = 1.333 TCPI_{\text{BAC}} = \frac{BAC - EV}{BAC - AC} = \frac{\$20,000,000}{\$15,000,000} = \mathbf{1.333} TCP I BAC = B A C − A C B A C − E V = $15 , 000 , 000 $20 , 000 , 000 = 1.333
Engineering Interpretation:
To finish within the original $40,000,000 budget, the craft labor force must execute all remaining work at a cost efficiency of 1.333 ($1.33 of earned value for every $1.00 spent).
Compared to current performance ( C P I = 0.800 CPI = 0.800 CP I = 0.800 ), this requires an efficiency improvement of: Δ Efficiency = 1.333 − 0.800 = + 0.533 (A 66.6% productivity increase) \Delta \text{Efficiency} = 1.333 - 0.800 = +0.533 \quad \text{(A 66.6\% productivity increase)} Δ Efficiency = 1.333 − 0.800 = + 0.533 (A 66.6% productivity increase)
Audit Conclusion: Finishing within the original B A C BAC B A C is completely unachievable.
Step 3: Evaluate Feasibility of Contractor's Proposed EAC ( E A C = $ 44 , 000 , 000 EAC = \text{\textdollar}44,000,000 E A C = $ 44 , 000 , 000 ) Available Funds Remaining under Proposed EAC = E A C − A C = $ 44 , 000 , 000 − $ 25 , 000 , 000 = $ 19 , 000 , 000 \text{Available Funds Remaining under Proposed EAC} = EAC - AC = \$44,000,000 - \$25,000,000 = \$19,000,000 Available Funds Remaining under Proposed EAC = E A C − A C = $44 , 000 , 000 − $25 , 000 , 000 = $19 , 000 , 000 T C P I EAC = B A C − E V E A C − A C = $ 20 , 000 , 000 $ 19 , 000 , 000 = 1.0526 TCPI_{\text{EAC}} = \frac{BAC - EV}{EAC - AC} = \frac{\$20,000,000}{\$19,000,000} = \mathbf{1.0526} TCP I EAC = E A C − A C B A C − E V = $19 , 000 , 000 $20 , 000 , 000 = 1.0526
Gap Analysis: Feasibility Gap = T C P I EAC − C P I = 1.0526 − 0.8000 = + 0.2526 (25.3 percentage points) \text{Feasibility Gap} = TCPI_{\text{EAC}} - CPI = 1.0526 - 0.8000 = +0.2526 \quad \text{(25.3 percentage points)} Feasibility Gap = TCP I EAC − CP I = 1.0526 − 0.8000 = + 0.2526 (25.3 percentage points)
Audit Conclusion: Although T C P I EAC = 1.053 TCPI_{\text{EAC}} = 1.053 TCP I EAC = 1.053 appears modest in isolation, achieving it requires improving labor efficiency from 0.800 0.800 0.800 to 1.053 1.053 1.053 . Because the gap (+0.253) far exceeds the empirical 0.10 feasibility threshold , the contractor's proposal is statistically invalid and overly optimistic .
Step 4: Compute Realistic EAC Using Typical CPI & Variance at Completion
Empirical Typical EAC: E A C typical = B A C C P I = $ 40 , 000 , 000 0.800 = $ 50 , 000 , 000 EAC_{\text{typical}} = \frac{BAC}{CPI} = \frac{\$40,000,000}{0.800} = \mathbf{\$50,000,000} E A C typical = CP I B A C = 0.800 $40 , 000 , 000 = $50 , 000 , 000
Validation via T C P I EAC TCPI_{\text{EAC}} TCP I EAC : T C P I EAC=50M = $ 20 , 000 , 000 $ 50 , 000 , 000 − $ 25 , 000 , 000 = $ 20 , 000 , 000 $ 25 , 000 , 000 = 0.800 TCPI_{\text{EAC=50M}} = \frac{\$20,000,000}{\$50,000,000 - \$25,000,000} = \frac{\$20,000,000}{\$25,000,000} = \mathbf{0.800} TCP I EAC=50M = $50 , 000 , 000 − $25 , 000 , 000 $20 , 000 , 000 = $25 , 000 , 000 $20 , 000 , 000 = 0.800 (Notice that T C P I EAC = C P I = 0.800 TCPI_{\text{EAC}} = CPI = 0.800 TCP I EAC = CP I = 0.800 , representing zero required change in demonstrated productivity).
Variance at Completion ( V A C VAC V A C ): V A C = B A C − E A C = $ 40 , 000 , 000 − $ 50 , 000 , 000 = − $ 10 , 000 , 000 VAC = BAC - EAC = \$40,000,000 - \$50,000,000 = -\mathbf{\$10,000,000} V A C = B A C − E A C = $40 , 000 , 000 − $50 , 000 , 000 = − $10 , 000 , 000 V A C percent = ( − $ 10 , 000 , 000 $ 40 , 000 , 000 ) × 100 = − 25.0 % VAC_{\text{percent}} = \left(\frac{-\$10,000,000}{\$40,000,000}\right) \times 100 = -25.0\% V A C percent = ( $40 , 000 , 000 − $10 , 000 , 000 ) × 100 = − 25.0%
Important
Cardinal Exam Rule for TCPI:
Whenever E A C = B A C / C P I EAC = BAC / CPI E A C = B A C / CP I , then T C P I EAC = C P I TCPI_{\text{EAC}} = CPI TCP I EAC = CP I .
If an owner accepts an EAC such that T C P I EAC > C P I + 0.10 TCPI_{\text{EAC}} > CPI + 0.10 TCP I EAC > CP I + 0.10 , the owner is accepting an unvalidated schedule/cost recovery plan that is virtually guaranteed to overrun.