Question

You are three months into a 6-month, 195,000 project. Invoices paid to date are 37,500 and the planned costs at three months were 75,000. What is the cost performance index?

1) 0.5
2) 22,500
3) 26
4) 2.6

Answer 1

The cost performance index (CPI) for the project is calculated as the planned costs ($75,000) divided by the actual costs ($37,500), which equals 2.0. This indicates the project earns two dollars of work value for every dollar spent.

Step-by-step explanation:

The cost performance index (CPI) is a key performance indicator that measures the cost efficiency of a project. It is calculated by dividing the Earned Value (EV) of a project by the Actual Cost (AC). In this case, the Earned Value at three months would ideally be the planned costs, which are $75,000, and the Actual Cost is the invoices paid to date, $37,500. The CPI is therefore $75,000 / $37,500 = 2.0, which means for every dollar spent, the project has earned two dollars of the work value. It's important to note that the question contains options for CPI, but the calculation provided does not match them directly; the closest answer would be option 4 if the values were rounded or otherwise estimated.