PGMP · Question #156
You are the program manager for the GHT Program for your company. This program has a budget at completion of $789,000 and is currently 40 percent complete, though it was scheduled to be 50 percent at
The correct answer is B. 3. Cost Performance Index (CPI) measures how efficiently money is being spent; the pennies lost per dollar is derived from (1 - CPI) x 100.
Question
You are the program manager for the GHT Program for your company. This program has a budget at completion of $789,000 and is currently 40 percent complete, though it was scheduled to be 50 percent at this time. Your program has spent $325,000 of the budget to date. Based on this information, how many pennies is your program losing per dollar spent on the work?
Options
- A20
- B3
- C1
- D11
How the community answered
(33 responses)- A3% (1)
- B73% (24)
- C15% (5)
- D9% (3)
Why each option
Cost Performance Index (CPI) measures how efficiently money is being spent; the pennies lost per dollar is derived from (1 - CPI) x 100.
Losing 20 pennies per dollar would require a CPI of 0.80, which would mean EV of only $260,000 - not the $315,600 calculated from a 40% complete $789,000 budget.
EV = $789,000 x 0.40 = $315,600; CPI = EV / AC = $315,600 / $325,000 = 0.9711. The loss per dollar is 1 - 0.9711 = 0.0289, which rounds to approximately 3 cents (pennies) lost for every dollar spent on the work.
Losing 1 penny per dollar implies a CPI of 0.99, far more efficient than the computed CPI of 0.9711 supports.
Losing 11 pennies per dollar implies a CPI of approximately 0.89, which does not match the values derived from the given budget, percent complete, and actual cost.
Concept tested: Earned value management - Cost Performance Index (CPI)
Source: https://www.pmi.org/pmbok-guide-standards/foundational/pmbok
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