Project Management Professional (PMP)® Examination Content OutlineProcessEasy
A project manager is leading a project with a budget of US$1,200,000. At the 50% completion mark, the Earned Value (EV) is US$500,000, and the Actual Cost (AC) is US$600,000. What is the Cost Performance Index (CPI) for this project?
- A1.11
- B0.90
- C0.83
- D1.20
Show answer & explanationAnswer & explanation
Correct answer: C. 0.83
The Cost Performance Index (CPI) is calculated as Earned Value (EV) divided by Actual Cost (AC). In this case, CPI = US$500,000 / US$600,000 = 0.8333, which rounds to 0.83.
Why the other options are wrong
- A. This is likely a miscalculation or incorrect formula application.
- B. This is likely a miscalculation or incorrect formula application.
- D. This would be AC/EV, which is incorrect for CPI.
Cost Performance Index (CPI)
A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost.
- Formula: CPI = EV / AC.
- CPI < 1 indicates a cost overrun (over budget).
- CPI > 1 indicates a cost underrun (under budget).
Memory trick: Earned over Actual, tells if you're a saver or a squanderer.