CompTIA Project+ (PK0-005)Project Life Cycle PhasesHard
A project's earned value data at the status date shows: Planned Value (PV) = $10,000, Earned Value (EV) = $8,000, and Actual Cost (AC) = $10,000. What does the Cost Performance Index (CPI) indicate about the project?
- ACPI = 0.8; the project is over budget
- BCPI = 0.8; the project is ahead of schedule
- CCPI = 1.25; the project is under budget
- DCPI = 1.0; the project is exactly on budget
Show answer & explanationAnswer & explanation
Correct answer: A. CPI = 0.8; the project is over budget
CPI = EV / AC = $8,000 / $10,000 = 0.8. A CPI below 1.0 means the project is spending more than the value of work actually completed, indicating a cost overrun (over budget). CPI does not measure schedule performance, so option D incorrectly links it to being ahead of schedule.
Why the other options are wrong
- B. CPI measures cost efficiency, not schedule performance; SPI would address schedule.
- C. Incorrect math - 8,000/10,000 is not 1.25; that would come from inverting the formula.
- D. CPI of 1.0 would require EV to equal AC, which is not the case here.
Cost Performance Index (CPI)
An earned value metric calculated as EV divided by AC that measures cost efficiency; a value below 1.0 indicates a cost overrun.
- Formula: CPI = EV / AC
- CPI < 1.0 = over budget; CPI > 1.0 = under budget
- Different from SPI, which measures schedule efficiency (EV/PV)
Memory trick: 'Plan, Earn, Actual, Cost-index, Schedule-index' - PV, EV, AC, CPI, SPI build the EVM toolkit.