A project has an EV of $40,000, PV of $50,000, and AC of $45,000. What is the cost performance index (CPI)?
Dividing earned value by actual cost ($40,000 ÷ $45,000) yields 0.89, satisfying the stem's request for the cost performance index. A CPI below 1.0 signals the project is over budget for the work completed, since each dollar spent returns only 89 cents of earned value.
Why this answer
The cost performance index (CPI) is calculated as EV / AC. With EV = $40,000 and AC = $45,000, CPI = 40,000 / 45,000 = 0.888..., which rounds to 0.89. A CPI less than 1 indicates the project is over budget for the work completed.
Exam trap
PK0-005 often tests the confusion between CPI and SPI formulas, as well as the inversion of EV and AC, so candidates must memorize that CPI = EV / AC and SPI = EV / PV.
How to eliminate wrong answers
Option A is wrong because 1.25 is the result of AC / EV (45,000 / 40,000), which is the inverse of CPI and not a standard earned value metric. Option B is wrong because 0.80 is the result of EV / PV (40,000 / 50,000), which is the schedule performance index (SPI), not CPI. Option D is wrong because 1.11 is the result of PV / AC (50,000 / 45,000), which is not a recognized earned value formula.