PK0-003 · Question #414
Which of the following shows a project that is presently over its financial budget?
The correct answer is D. CPI = 0.8. A project is considered over its financial budget when its Cost Performance Index (CPI) is less than 1, indicating that more money is being spent than planned for the work completed.
Question
Which of the following shows a project that is presently over its financial budget?
Options
- ACPI = 1.4
- BCPI = 0
- CCV = +$11,000
- DCPI = 0.8
How the community answered
(35 responses)- A3% (1)
- B3% (1)
- C6% (2)
- D89% (31)
Why each option
A project is considered over its financial budget when its Cost Performance Index (CPI) is less than 1, indicating that more money is being spent than planned for the work completed.
A CPI of 1.4 indicates that the project is performing better than expected, completing work for less than the budgeted cost, meaning it is under budget.
A CPI of 0 would imply that either no value has been earned for the work completed or the actual cost is infinitely large, which is an unrealistic value in typical project tracking.
A Cost Variance (CV) of +$11,000 indicates that the project's earned value is greater than the actual cost, meaning the project is under budget, not over budget.
The Cost Performance Index (CPI) is a measure of the cost efficiency of budgeted resources, calculated as the ratio of earned value to actual cost (EV/AC). A CPI less than 1, such as 0.8, indicates that the project is spending more than planned for the work completed, meaning it is over budget.
Concept tested: Earned Value Management - Cost Performance Index
Source: https://www.pmi.org/pmbok-guide-standards/foundational/pmbok/earned-value-management-techniques
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