Donna’s project has a budget at completion of $1,987,560 and she is currently 40 percent complete.
Her project schedule called for her to be 45 percent complete but there have been some
complications in the project. These complications have caused Donna to spend $125,000 more than
what the work she has completed is worth. Based on this information what is the cost performance
index (CPI) for Donna’s project?
A.
.90
B.
.86
C.
86
D.
$920,024
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 actual costs are $125,000 more than what the work is worth, which
means you’ll need to find the earned value, $795,024 and add $125,000 to find the actual costs of
the project, which
are $920,024.
Answer option C is incorrect. This is a trick as 86 is not the same value as .86. On your PMP exam pay
attention to these little details.
Answer option A is incorrect. .90 is slightly more than the Schedule Performance Index of this
project.
Answer option D is incorrect. This value represents the actual cost of the project.