You are the project manager of the NNH project. In this project you have created a contingency response that the cost performance index should be less than 0.93. The NHH project has a budget at completion of $945,000 and is 45 percent complete – though the project should be 49 percent complete. The project has spent $455,897 to reach the 45 percent complete milestone. What is the project’s cost performance index?

A.
1.06

B.
0.92

C.
0.93

D.
-$30,647

Explanation:

The cost performance index is found by dividing the earned value by the actual costs. In this example it is:
CPI= 425,250/455,897=0.93 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.

Answer option A is incorrect. 0.92 is the schedule performance index for the project.

Answer option B is incorrect. 1.06 represents the to-complete performance index for the project.

Answer option C is incorrect. -$30,647 is the cost variance for the project.

Reference: "Project Management Body of Knowledge (PMBOK Guide), Fourth Edition"