Which earned value management (EVM) metric is a measure of the cost efficiency of budgeted resources expressed as a ratio of earned value (EV) to actual cost (AC) and is considered a critical EVM metric?

The Cost Performance Index (CPI) is a fundamental Earned Value Management (EVM) metric used to measure the cost efficiency of a project. It is calculated as the ratio of Earned Value (EV) to Actual Cost (AC), using the formula CPI = EV / AC. A CPI value greater than 1.0 indicates a favorable condition (under budget), while a value less than 1.0 indicates an unfavorable condition (over budget). A CPI of 1.0 means the project is exactly on budget. This ratio provides a clear, standardized measure of how efficiently project resources are being used to produce value.

1. Project Management Institute. (2017). A Guide to the Project Management Body of Knowledge (PMBOK® Guide) (6th ed.). Project Management Institute. Section 7.4.2.2, Data Analysis, p. 263. The guide explicitly defines CPI as "A measure of the cost efficiency of budgeted resources... CPI = EV / AC." It also defines CV, BAC, and VAC on pages 263-265, confirming they do not match the question's description.

2. Vanhoucke, M. (2011). On the use of earned value management for project control. Ghent University, Faculty of Economics and Business Administration. Working Paper, p. 4. This academic paper states, "The Cost Performance Index (CPI) is defined as the ratio of the earned value to the actual costs (CPI = EV/AC) and measures the cost efficiency."

3. Warburton, R. D. H. (2011). A time-dependent earned value model for software projects. International Journal of Project Management, 29(8), 1082–1090. https://doi.org/10.1016/j.ijproman.2011.02.005. The article defines the standard EVM metrics, stating "The cost performance index, CPI = EV/AC, is the standard measure of cost efficiency."