A project has a Budget at Completion (BAC) of Rs. 10 lakh, Earned Value (EV) = Rs. 4 lakh, and Actual Cost (AC) = Rs. 5 lakh. The Cost Performance Index (CPI) and project status are:
Choose the correct answer
CPI = 1.25, project is under budget
CPI = 0.80, project is over budget (spending Rs. 1 to earn Rs. 0.80 of value)
CPI = 1.0, on budget
CPI = 2.0, significantly under budget
Correct Answer
B. CPI = 0.80, project is over budget (spending Rs. 1 to earn Rs. 0.80 of value)
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CPI = EV/AC = 4/5 = 0.80. CPI < 1 means cost overrun (more money spent than value earned). EAC = BAC/CPI = 10/0.80 = Rs. 12.5 lakh (projected final cost). Schedule Performance Index SPI = EV/PV (PV = planned value for work scheduled to date). SPI < 1 = behind schedule.
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