ISACA Certified Information Systems Auditor (CISA) ExamDomain 3: Information Systems Acquisition, Development and ImplementationMedium
A project steering committee is reviewing the progress of a critical system implementation project. The project manager reports that the project is currently 20% complete and has spent $150,000 of its $500,000 budget. The planned value (PV) for the work completed so far was $120,000. What is the Cost Performance Index (CPI) for this project?
- A0.60
- B0.80
- C1.67
- D1.25
Show answer & explanationAnswer & explanation
Correct answer: B. 0.80
The Cost Performance Index (CPI) is calculated as Earned Value (EV) divided by Actual Cost (AC). In this scenario, the Earned Value (EV) is the Planned Value for the work completed, which is $120,000. The Actual Cost (AC) is the amount spent, which is $150,000. Therefore, CPI = $120,000 / $150,000 = 0.80.
Why the other options are wrong
- A. This incorrectly uses the project completion percentage or total budget, not the specific EV and AC.
- C. This incorrectly uses the project completion percentage or total budget, not the specific EV and AC.
- D. This would be AC/EV, indicating the inverse of the actual performance.
Cost Performance Index (CPI)
A measure of the cost efficiency of budgeted resources, expressed as the ratio of earned value (EV) to actual cost (AC).
- CPI = EV / AC.
- CPI > 1 indicates under budget.
- CPI < 1 indicates over budget.
- CPI = 1 indicates on budget.
Memory trick: EVM: Evaluate Value, Manage Money.