1. What is the Cost Performance Index (CPI)?

The Cost Performance Index (CPI) is a measure of the cost efficiency of budgeted resources. It represents the ratio of earned value (EV) to actual cost (AC). A CPI value greater than 1 indicates the project is under budget, while a value less than 1 indicates it is over budget.

2. How Does the Calculator Work?

The calculator uses the CPI formula:

Where:

• \( EV \) — Earned Value (dollars)
• \( AC \) — Actual Cost (dollars)

Explanation: The formula calculates how efficiently the project is using its resources by comparing the value of work completed to the actual costs incurred.

3. Importance of CPI Calculation

Details: CPI is a critical metric in project management that helps assess cost performance, forecast final project costs, and make informed decisions about resource allocation and budget adjustments.

4. Using the Calculator

Tips: Enter earned value and actual cost in dollars. Both values must be positive numbers greater than zero for accurate calculation.

5. Frequently Asked Questions (FAQ)

Q1: What does a CPI of 1.0 mean?
A: A CPI of 1.0 means the project is exactly on budget - the earned value equals the actual cost.

Q2: What is considered a good CPI value?
A: A CPI greater than 1.0 is generally considered good as it indicates the project is under budget. The higher the CPI, the better the cost performance.

Q3: How often should CPI be calculated?
A: CPI should be calculated regularly throughout the project, typically as part of periodic performance reporting (e.g., weekly or monthly).

Q4: Can CPI be used to forecast final project costs?
A: Yes, CPI can be used with the Estimate at Completion (EAC) formula to forecast final project costs based on current performance.

Q5: What factors can affect CPI?
A: Factors include inaccurate initial estimates, scope changes, resource rate changes, productivity issues, and unexpected events affecting costs.