CAPM · Question #148
A project reports an earned value (EV) of US$45 for work completed with an actual cost (AC) of US$40. What is the cost performance index (CPI)?
The correct answer is B. 1.12. The Cost Performance Index (CPI) measures cost efficiency by dividing Earned Value by Actual Cost. A CPI above 1.0 indicates the project is under budget.
Question
Options
- A0.88
- B1.12
- C0.58
- D1.58
How the community answered
(24 responses)- A13% (3)
- B79% (19)
- C4% (1)
- D4% (1)
Why each option
The Cost Performance Index (CPI) measures cost efficiency by dividing Earned Value by Actual Cost. A CPI above 1.0 indicates the project is under budget.
0.88 results from inverting the formula and dividing AC by EV (40/45 = 0.89), which is not the CPI formula.
CPI is calculated as EV divided by AC. With EV of $45 and AC of $40, CPI = 45 / 40 = 1.125, which rounds to 1.12. A CPI greater than 1.0 means the project is getting more value per dollar spent than planned, indicating an under-budget condition.
0.58 does not correspond to any standard EVM formula applied to the given values.
1.58 does not correspond to any standard EVM formula applied to the given values.
Concept tested: Earned value management - CPI calculation
Source: https://www.pmi.org/learning/library/earned-value-management-best-practices-7045
Topics
Community Discussion
No community discussion yet for this question.