CAP · Question #161
You are the project manager of the NHQ project for your company. Management has told you that you must implement an agreed upon contingency response if the Cost Performance Index in your project is…
The correct answer is D. 0.91. To find the Cost Performance Index (CPI), you need Earned Value (EV) and Actual Cost (AC). EV = BAC × % actually complete = $250,000 × 0.60 = $150,000. AC is given as $165,000. CPI = EV / AC = $150,000 / $165,000 ≈ 0.91. Since 0.91 > 0.90, the contingency response is NOT…
Question
You are the project manager of the NHQ project for your company. Management has told you that you must implement an agreed upon contingency response if the Cost Performance Index in your project is less than 0.90. Consider that your project has a budget at completion of $250,000 and is 60 percent complete. You are scheduled to be however, 75 percent complete, and you have spent $165,000 to date. What is the Cost Performance Index for this project to determine if the contingency response should happen?
Options
- A0.88
- B0.80
- C-$37,500
- D0.91
How the community answered
(26 responses)- A4% (1)
- B4% (1)
- C8% (2)
- D85% (22)
Explanation
To find the Cost Performance Index (CPI), you need Earned Value (EV) and Actual Cost (AC). EV = BAC × % actually complete = $250,000 × 0.60 = $150,000. AC is given as $165,000. CPI = EV / AC = $150,000 / $165,000 ≈ 0.91. Since 0.91 > 0.90, the contingency response is NOT triggered. Choice A (0.88) is a distractor - it would result if you used the scheduled 75% instead of the actual 60% for EV. Choice C is the Schedule Variance (SV), not CPI. The formula CPI = EV/AC is fundamental to Earned Value Management.
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