A program has a BAC of $550,000 and is currently 45 percent complete though was actually scheduled to be 55 percent complete by this time. The program has spent, however, $265,000 to date. Based on this information what is the cost performance index (CPI) for this program?

The Cost Performance Index (CPI) measures the cost efficiency of the work accomplished. It is calculated using the formula CPI = EV / AC (Earned Value / Actual Cost). First, calculate the Earned Value (EV), which is the value of the work completed. EV = Budget at Completion (BAC) × Actual Percent Complete EV = $550,000 × 0.45 = $247,500 Next, use the calculated EV and the given Actual Cost (AC) to find the CPI. CPI = $247,500 / $265,000 = 0.9339... Rounded to two decimal places, the CPI is 0.93.

B. This value (0.82) represents the Schedule Performance Index (SPI = EV/PV), which measures schedule efficiency, not cost efficiency.
C. This dollar value ($323,889) represents the Estimate to Complete (ETC), which is a forecast of future costs, not the CPI ratio.
D. This is a negative dollar value, which would represent a variance (like Cost Variance), not the CPI, which is an efficiency index.

1. Project Management Institute. (2017). The Standard for Program Management (4th ed.). Section 6.4.3, Program Monitoring and Control Outputs, discusses performance information, which includes EVM metrics like CPI. Appendix X4.1 details Earned Value Management as a key tool.

2. Project Management Institute. (2019). The Practice Standard for Earned Value Management (3rd ed.). Section 2.5, Cost Performance Index (CPI). The formula is explicitly stated as CPI = EV / AC.

3. Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th ed.). Section 7.4.2.2, Data Analysis. This section defines Earned Value Analysis and its formulas, including EV = % Complete × BAC and CPI = EV / AC.