ISACA Certified Information Systems Auditor (CISA) ExamDomain 3: Information Systems Acquisition, Development and ImplementationMedium
An IS auditor is assessing the project management practices for a large-scale system integration project. The project is currently 60% complete, but only 40% of the budget has been expended. The Earned Value (EV) is $240,000, and the Actual Cost (AC) is $160,000. What is the Cost Performance Index (CPI) of this project?
- A1.33
- B1.50
- C0.67
- D0.75
Show answer & explanationAnswer & explanation
Correct answer: B. 1.50
The Cost Performance Index (CPI) is calculated as Earned Value (EV) divided by Actual Cost (AC). In this case, CPI = EV / AC = $240,000 / $160,000 = 1.50. A CPI greater than 1.0 indicates that the project is under budget for the work performed.
Why the other options are wrong
- A. This would be the result if Actual Cost was divided by Planned Value (AC/PV), which is not CPI.
- C. This would be the result if Actual Cost was divided by Earned Value (AC/EV), which is not CPI.
- D. This value is incorrect; it might result from calculation errors or misinterpretation of the formula.
Cost Performance Index (CPI)
An Earned Value Management (EVM) metric that measures the cost efficiency of a project. It is calculated as Earned Value (EV) divided by Actual Cost (AC).
- CPI > 1.0 indicates under budget.
- CPI < 1.0 indicates over budget.
- CPI = 1.0 indicates on budget.
Memory trick: CPI: Cost Performance, 'EV'erything over 'AC'tual.