PK0-005 Project Life Cycle Practice Question
A project manager is calculating the cost performance index (CPI) for a project. The earned value (EV) is $50,000 and the actual cost (AC) is $60,000. What does the CPI indicate? (Select TWO correct statements.)
Answer choices
Why each option matters
Answer the question above first, then reveal the full breakdown to understand why each option is right or wrong.
Correct answer & explanation
✓
The project is over budget.
CPI = EV/AC = 50000/60000 = 0.83. A CPI less than 1 indicates the project is over budget. The project is spending more than planned for the work performed.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
The project is over budget.
Why this is correct
Correct. CPI < 1 means over budget.
- ✗
The project is under budget.
Why it's wrong here
Under budget would be CPI > 1.
- ✗
The project is getting $1.20 worth of work for every $1 spent.
Why it's wrong here
That would be CPI = 1.2, not 0.83.
- ✓
The project is getting $0.83 worth of work for every $1 spent.
Why this is correct
Correct. CPI indicates the efficiency of cost performance.
- ✗
The project is on schedule.
Why it's wrong here
CPI does not measure schedule performance; SPI does.
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