You work as a Project Manager for Tech Media Inc. Several projects are running under your supervision. Rick, team leader of a project, provides you performance indexes of his project. The cost…

Question

Options

• AThe cost performance is right on target.
• BThe cost performance is below the expectation.
• CThe cost performance is better than expected.
• DThe project is behind the schedule.

• A
  4% (1)
• B
  8% (2)
• C
  73% (19)
• D
  15% (4)

Explanation

According to the question, the CPI value of Rick's project is 1.135. This figure is greater than 1. Hence, it shows that the cost performance is better than expected. Cost performance index (CPI) is used to calculate performance efficiencies. It is used in trend analysis to predict future performance. CPI is the ratio of earned value to actual cost. The CPI is calculated based on the following formula: CPI = Earned Value (EV) / Actual Cost (AC) If the CPI value is greater than 1, it indicates better than expected performance, whereas if the value is less than 1, it shows poor performance. The CPI value of 1 indicates that the project is right on target. Answer options B and A are incorrect. The CPI value 1 and below 1 depicts that the cost performance is right on target and below expectation respectively. Answer option D is incorrect. CPI has nothing to do with the schedule. It is schedule variance (SV) that tells that the schedule is ahead or behind the plan.

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