CAPM Practice Question: Project Management Fundamentals and Core Concepts
A project sponsor asks the project manager to report on budget performance. Which metric best indicates whether the project is under or over budget?
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
✓
Cost Performance Index (CPI)
Cost Performance Index (CPI) is a measure of cost efficiency relative to the work performed; CPI > 1 indicates under budget, CPI < 1 indicates over budget. It is a relative metric that allows comparison across projects or time periods, making it the best indicator for budget performance. Cost Variance (CV) is an absolute dollar amount and can be misleading when comparing projects of different sizes. Schedule Performance Index (SPI) and Schedule Variance (SV) relate to schedule, not cost.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✓
Cost Performance Index (CPI)
Why this is correct
CPI is the ratio of earned value to actual cost, directly indicating budget performance.
- ✗
Cost Variance (CV)
Why it's wrong here
CV shows absolute cost difference but does not indicate efficiency relative to budget.
- ✗
Schedule Variance (SV)
Why it's wrong here
SV measures schedule deviation, not cost.
- ✗
Schedule Performance Index (SPI)
Why it's wrong here
SPI measures schedule performance, not cost.
Go deeper
Related to this question
About these practice questions
This CAPM question is part of Courseiva's 487-question bank — original exam-style content with full explanations and wrong-answer analysis, never real exam questions or exam dumps. Learn why practice questions differ from exam dumps →
JA
Written by Johnson Ajibi, MSc IT Security
Senior Network & Security Engineer · founder of Courseiva
This CAPM practice question is part of Courseiva's free PMI certification practice question bank. Courseiva provides original exam-style practice questions with explanations, topic-based practice, mock exams, readiness tracking, and study analytics to help learners prepare for the CAPM exam.