1. What is the Cost Performance Index?

The Cost Performance Index (CPI) is a key metric in project management that measures the cost efficiency of project work. It compares the earned value (EV) of work performed to the actual cost (AC) incurred.

2. How Does the Calculator Work?

The calculator uses the CPI formula:

Where:

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

Explanation: A CPI greater than 1 indicates cost efficiency (under budget), while a CPI less than 1 indicates cost inefficiency (over budget).

3. Importance of CPI Calculation

Details: CPI is crucial for project cost control, budget forecasting, and assessing overall project health. It helps project managers make informed decisions about resource allocation and corrective actions.

4. Using the Calculator

Tips: Enter earned value and actual cost in the same currency units. Both values must be positive numbers, with actual cost greater than zero.

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: Generally, a CPI greater than 1.0 is 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 lifecycle, typically during periodic project status reviews or at major milestones.

Q4: Can CPI be used for forecasting?
A: Yes, CPI is often used to forecast the final project cost using the formula: EAC = BAC / CPI, where EAC is Estimate at Completion and BAC is Budget at Completion.

Q5: What are the limitations of CPI?
A: CPI doesn't account for future risks, doesn't measure schedule performance, and may be misleading if the earned value measurements are inaccurate.