What does CPI value less than 1.0 indicates?

The correct answer is A. Cost overrun for work completed. CPI (Cost Performance Index) = Earned Value (EV) / Actual Cost (AC). A CPI less than 1.0 means the actual cost exceeds the earned value - you are spending more money than the value of work completed, which is a cost overrun. A CPI of exactly 1.0 means cost is on track (D). A…

Program Life Cycle Management

Question

Options

ACost overrun for work completed
BScheduled performance is great
CCost underrun of performance to date
DCost for completed work is as per estimate

How the community answered

(25 responses)

A
88% (22)
C
8% (2)
D
4% (1)

Explanation

CPI (Cost Performance Index) = Earned Value (EV) / Actual Cost (AC). A CPI less than 1.0 means the actual cost exceeds the earned value - you are spending more money than the value of work completed, which is a cost overrun. A CPI of exactly 1.0 means cost is on track (D). A CPI greater than 1.0 indicates a cost underrun (C). CPI is a cost metric, not a schedule metric, so it has no direct bearing on schedule performance (B), which is measured by SPI (Schedule Performance Index).

Topics

#Earned Value Management (EVM)#Cost Performance Index (CPI)#Cost Performance#Performance Measurement

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