What does a CPI value greater than 1.0 indicate?

The correct answer is B. Cost under the estimated value. CPI (Cost Performance Index) = Earned Value (EV) ÷ Actual Cost (AC). When CPI > 1.0, EV exceeds AC - meaning you earned more value than you spent, so you are under budget (B is correct). Option A describes CPI = 1.0 exactly, where earned value equals actual cost. Option C is a…

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Options

ACost right at the estimated value
BCost under the estimated value
CCost right at the actual value
DCost over the estimated value

How the community answered

(27 responses)

A
11% (3)
B
85% (23)
D
4% (1)

Explanation

CPI (Cost Performance Index) = Earned Value (EV) ÷ Actual Cost (AC). When CPI > 1.0, EV exceeds AC - meaning you earned more value than you spent, so you are under budget (B is correct). Option A describes CPI = 1.0 exactly, where earned value equals actual cost. Option C is a distractor that conflates "actual value" with the formula's components - CPI doesn't compare actuals to actuals. Option D (over budget) is the opposite of B and describes CPI < 1.0, where you spent more than the value earned.

Memory tip: Think of CPI like a store coupon - a value greater than 1 means you got more than you paid for (a deal/under budget); less than 1 means you overpaid (over budget).

Topics

#CPI interpretation#cost performance index#budget performance#earned value management

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