CAPM Predictive Plan-Based Methodologies Practice Question
A project manager notices that the project's cost performance index (CPI) is 0.85. What does this indicate?
⚠ Common exam trap
CAPM often tests the confusion between CPI and SPI — candidates may incorrectly associate CPI with schedule performance, but CPI is strictly a cost efficiency metric.
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
A CPI of 0.85 indicates that the project is over budget. CPI is calculated as Earned Value (EV) divided by Actual Cost (AC). A value less than 1.0 means that for every dollar spent, less than a dollar of value was earned, indicating cost overrun. Therefore, the project is over budget.
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 under budget
Why it's wrong here
A CPI of 0.85 means every unit of planned value costs 1.18 units, so the project is over budget, not under. Confusing CPI with a favourable variance is tempting because values below 1.0 can look like a threshold breach rather than an efficiency ratio; CPI above 1.0 would indicate under-budget performance.
- ✗
The project is behind schedule
Why it's wrong here
CPI measures cost efficiency against earned value, not time; schedule position comes from the schedule performance index (SPI) or schedule variance. The confusion arises because earned value metrics share the same EVM framework, so a poor CPI often accompanies slippage, but only SPI below 1.0 indicates being behind schedule.
- ✗
The project is ahead of schedule
Why it's wrong here
CPI compares earned value to actual cost, carrying no timing information; being ahead of schedule is shown by SPI above 1.0. The temptation is that EVM metrics are often reported together, so a low CPI may coincide with schedule variance, yet CPI 0.85 itself says nothing about schedule position.
- ✓
The project is over budget
Why this is correct
A CPI of 0.85 means earned value is 85% of actual cost, so every unit of work delivered costs more than planned. Since CPI below 1.0 indicates cost inefficiency, the project is over budget, matching the stem's stated value.
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Written and reviewed by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
Last reviewed September 2026 · checked against the official PMI exam blueprint
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