Which of the following is true for Cost Performance Index (CPI)?

Which of the following is true for Cost Performance Index (CPI)?
A . If the CPI > 1, it indicates better than expected performance of project
B . CPI = Earned Value (EV) * Actual Cost (AC)
C . It is used to measure performance of schedule
D . If the CPI = 1, it indicates poor performance of project

View Answer

Answer: A

Explanation:

Cost performance index (CPI) is used to calculate performance efficiencies of project. It is used in trend analysis to predict future performance. CPI is the ratio of earned value to actual cost.

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.

Incorrect Answers:

B: CPI is the ratio of earned value to actual cost, i.e., CPI = Earned Value (EV) / Actual Cost (AC).

C: Cost performance index (CPI) is used to calculate performance efficiencies of project and not its schedule.

D: The CPI value of 1 indicates that the project is right on target.