Cost performance index (CPI) is defined by AACE International as: (assume no change in budgeted quantities)

The Cost Performance Index (CPI) is a crucial metric in project management, particularly within the

realm of cost control. According to the Association for the Advancement of Cost Engineering (AACE)

International, the CPI is calculated as:

CPI = BCWP / ACWP

Where:

BCWP (Budgeted Cost of Work Performed): Also known as Earned Value (EV), BCWP represents the

budgeted cost for the work that has actually been completed by a specific point in time.

ACWP (Actual Cost of Work Performed): This is the actual cost incurred for the work completed by

that same point in time.

The CPI is an index that measures the cost efficiency of budgeted resources for a project. A CPI of 1.0

indicates that the project is on budget, as the actual cost matches the earned value. A CPI greater

than 1.0 suggests that the project is performing well in terms of cost (i.e., it is under budget), while a

CPI less than 1.0 indicates that the project is over budget.

This metric is vital in cost estimating and control, as it provides project managers with a quantifiable

indicator of cost performance, helping them make informed decisions to maintain or correct the

project's financial trajectory.