Maurice is the project manager of the NHQ Project and his project team has just finished the
project activities. The quality control team reports that the project deliverables are perfect. The
only thing left to in the project is to verify scope. This process will be performed by the project
stakeholders. Maurice is required to submit a final project report and report on the project
performance. Maurice’s project had a budget of $234,000 but the project spent $245,000. In the
final report management wants to know the project’s cost performance index (CPI). What value
should Maurice report?

A.
-$11,000

B.
.96

C.
There is not enough information to know.

D.
1

Explanation:
Cost performance index (CPI) is used to calculate performance efficiencies. It is used in trend
analysis to predict future performance. CPI is the ratio of earned value to actual cost. The CPI is
calculated based on the following formula: CPI = Earned Value (EV) / Actual Cost (AC) If the CPI
value is greater than 1, it indicates better than expected performance, whereas if the value is less
than 1, it shows poor performance. The CPI value of 1 indicates that the project is right on target.
In this instance, the earned value is $234,000 as the project work is 100 percent. The actual costs
are $245,000.
Answer option D is incorrect. This is the schedule performance index value.
Answer option A is incorrect. This is the variance at completion for the project.
Answer option C is incorrect. There is enough information to find the answer.