Question

You have been hired to design User Interface for a Web Site that has four web pages. Each web page is scheduled to take one day to complete at a cost of $600 per web page. At the end of day 2, you have spent $1100 and 1.5 pages are complete.

What is the Cost Performance Index (CPI)?

Answer 1

The Cost Performance Index (CPI) for the scenario is 0.818, which indicates that for every dollar spent on the project, only about $0.82 of value is being earned.

Step-by-step explanation:

The Cost Performance Index (CPI) is a measure used in project management to calculate the efficiency of budgeted resources on a project. It is defined as the ratio of Earned Value (EV) to Actual Cost (AC).

For the given scenario, the EV is the budgeted cost of work performed, which is $600 per web page times 1.5 web pages completed, resulting in $900. The AC is the actual amount spent, which is $1100. Thus, the CPI is calculated as EV divided by AC, or $900 / $1100, giving us a CPI of approximately 0.818.

The CPI of 0.818 indicates that for every dollar spent, only about $0.82 of value is actually being earned, signifying a cost efficiency below expectations.