PMP · Question #804
A project manager is performing earned value management (EVM) for a cross-country pipeline project. The project manager has determined the ratio of earned value (EV) to actual cost (AC) for the projec
The correct answer is B. The project has started exceeding the planned cost. The ratio of Earned Value (EV) to Actual Cost (AC) is the Cost Performance Index (CPI). A CPI of 0.9024 (less than 1) indicates that the project is getting less value for the money spent, meaning it is over budget or exceeding its planned cost for the work completed.
Question
Options
- AThe project is earning less value than was planned
- BThe project has started exceeding the planned cost
- CThe project has earned more value than planned
- DThe project is close to exceeding the planned cost
How the community answered
(34 responses)- A3% (1)
- B88% (30)
- C6% (2)
- D3% (1)
Why each option
The ratio of Earned Value (EV) to Actual Cost (AC) is the Cost Performance Index (CPI). A CPI of 0.9024 (less than 1) indicates that the project is getting less value for the money spent, meaning it is over budget or exceeding its planned cost for the work completed.
While a CPI less than 1 can imply earning less value per unit of cost, the more direct interpretation related to cost performance is that the project is over budget, not necessarily earning less total value than planned, but rather less efficiently.
The ratio of Earned Value (EV) to Actual Cost (AC) is known as the Cost Performance Index (CPI). A CPI value less than 1 (0.9024 in this case) indicates that the project is over budget for the work performed, meaning that the actual cost is higher than the earned value, and thus, the project has started exceeding its planned cost.
A CPI greater than 1 would indicate that the project has earned more value than planned for the actual cost incurred, meaning it is under budget.
While 0.9024 is close to 1, it definitively indicates the project is already exceeding planned costs, not just "close to" exceeding them.
Concept tested: Earned Value Management (EVM) - Cost Performance Index (CPI)
Source: https://www.projectmanager.com/blog/what-is-cost-performance-index-cpi
Topics
Community Discussion
5
Carlos M.Dec 13, 2025The answer is B. The ratio of EV to AC is the cost performance index, or CPI. A CPI of 0.9024 means you are getting less than a dollar of earned value for every dollar spent, so the project has started exceeding the planned cost. Option D is a trap because it implies you are just approaching the limit, but anything under 1.0 already means you are over budget right now. Option A sounds plausible but it is really describing a schedule problem, not a cost one.
Bao N.Dec 25, 2025Leaned toward A first because "earning less value than planned" sounded close, but the ratio of EV to AC is the cost performance index (CPI), and 0.9024 means you are spending more than you earned, so B is the one they want.
Zlatan X.Dec 26, 2025Agree on B, and the program-level angle to remember is that sustained CPI below 1.0 across components is exactly the kind of trend that should trigger governance review before it erodes overall benefits realization.
Hiroshi T.Dec 17, 2025Leaned toward A first, but per PMBOK, EV/AC is CPI and under 1.0 means cost overrun, so B.
Zlatan X.Dec 31, 2025I first leaned toward A because a CPI below 1 can feel like a value shortfall, but EV divided by AC is the cost performance index, and 0.9024 means you are spending more than planned for the value earned, which is B.