The cost performance index, also referred to by the abbreviation (CPI), refers specifically to a method, chart, or other instrument that is implemented for the purposes of determining/measuring the actual cost efficiency of a project. The cost performance index is determined by measuring the ratio of earned value (also known by the abbreviation of EV) to actual costs (also known by the abbreviation of AC).The equation to determine the cost performance index can be derived by the following equation: CPI=EV divided by AC. If the resulting value is greater than one indicates that the conditions of cost efficiency for the project are considered to be favorable. A resulting value that is less than one indicates that the conditions of cost efficiency for the project are considered to be less than favorable. The cost performance index can change over the life of a project depending on the ways in which the earned values and actual cost have changed.
Cost Management
Cost Performance Index
1 min read
Updated Jul 27, 2017
Project Victor archive
Keep reading
Related answers from the library.
Forecast
What Are Forecasts in the Context of Cost Management? In the realm of cost management, forecasts are essential tools that enable project…
Estimate
Understanding Estimates in Cost Management An estimate is a critical component of cost management that serves as a foundational input and output…
Basis of Estimates
Understanding the Basis of Estimates in Project Management The Basis of Estimates (BOE) is an essential document in project management that complements…
Analogous Estimating [Technique]
Analogous estimating is a technique for estimating a variety of project parameters and measures of scale. The project parameters that can be…