ISACA Certified Information Systems Auditor (CISA) ExamDomain 3: Information Systems Acquisition, Development and ImplementationMedium
An IS auditor is evaluating the project management practices for a new data analytics platform. The project manager reports a Budgeted Cost of Work Performed (BCWP) of $750,000, an Actual Cost of Work Performed (ACWP) of $800,000, and a Budgeted Cost of Work Scheduled (BCWS) of $700,000. What is the Cost Performance Index (CPI)?
- A1.143
- B1.071
- C0.875
- D0.938
Show answer & explanationAnswer & explanation
Correct answer: D. 0.938
The Cost Performance Index (CPI) measures the cost efficiency of a project. It is calculated as BCWP / ACWP. In this case, $750,000 / $800,000 = 0.9375, which rounds to 0.938.
Why the other options are wrong
- A. Incorrect. This calculation does not correspond to the CPI formula.
- B. Incorrect. This would be ACWP / BCWP, which is the inverse of CPI.
- C. Incorrect. This would be BCWS / ACWP, which is not the CPI.
Cost Performance Index (CPI)
The Cost Performance Index (CPI) is an Earned Value Management (EVM) metric that measures the cost efficiency of budgeted resources for work performed.
- CPI = Earned Value (EV) / Actual Cost (AC).
- A CPI < 1 indicates a cost overrun.
- A CPI > 1 indicates a cost underrun.
Memory trick: Cost Performance: Earned Value over Actual Cost.