CPI and SPI Interpretation — Over Budget and Behind Schedule
A project manager is using a predictive approach for a construction project. The team has completed 40% of the work, but the actual cost is $500,000 against a planned value of $450,000. The project manager calculates the cost performance index (CPI) and schedule performance index (SPI). Which conclusion is correct?
Quick Answer
The correct conclusion is that the project is over budget and behind schedule. This is determined by calculating the cost performance index (CPI) and schedule performance index (SPI), both of which fall below 1.0 when earned value (EV) is less than both actual cost (AC) and planned value (PV). Here, with 40% of work completed (EV = 0.4 × BAC) against a PV of $450,000 and an AC of $500,000, the EV is lower than PV, meaning less work was done than planned, and AC exceeds EV, meaning more was spent than the work earned—so both CPI and SPI are under 1.0. On the CAPM exam, this tests your ability to interpret EVM metrics from a predictive project scenario, a common calculation-based question. A frequent trap is confusing CPI and SPI direction: remember that a value less than 1.0 always signals trouble—CPI under 1.0 means over budget, SPI under 1.0 means behind schedule. A simple memory tip is “less than one, underdone and overrun.”
⚠ Common exam trap
A common mix-up: candidates confuse planned value (PV) with earned value (EV), incorrectly assuming that because AC > PV, the project is over budget but ahead of schedule, when in fact EV must be compared to both PV and AC to determine schedule and cost performance.
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 and behind schedule
The project has completed 40% of the work, so the earned value (EV) is 40% of the total budget. With actual cost (AC) of $500,000 and planned value (PV) of $450,000, the CPI = EV/AC = (0.4 * BAC)/500,000. Since AC > PV and EV < PV (because only 40% of work is done vs. 45% planned), both CPI and SPI are less than 1.0, indicating the project is over budget and behind schedule.
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 but ahead of schedule
Why it's wrong here
SPI < 1 indicates behind schedule, not ahead.
- ✗
The project is on budget and on schedule
Why it's wrong here
Both indices are less than 1, so not on track.
- ✗
The project is under budget and ahead of schedule
Why it's wrong here
CPI < 1 indicates over budget, not under budget.
- ✓
The project is over budget and behind schedule
Why this is correct
CPI < 1 (over budget) and SPI < 1 (behind schedule).
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Related to this question
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Same concept, more angles
1 more way this is tested on CAPM
These questions test the same concept from different angles. Work through them to make sure you can recognise it however the exam phrases it.
Variation 1. A project is in the execution phase. The earned value analysis shows a Cost Performance Index (CPI) of 0.8 and a Schedule Performance Index (SPI) of 0.9. What is the best interpretation of these metrics?
medium- ✓ A.The project is over budget and behind schedule.
- B.The project is under budget but behind schedule.
- C.The project is over budget but ahead of schedule.
- D.The project is under budget and ahead of schedule.
Why A: A CPI of 0.8 (less than 1) indicates the project is over budget (cost overrun), and an SPI of 0.9 (less than 1) indicates the project is behind schedule. Option B is wrong because it claims the project is under budget, but CPI < 1 means over budget. Option C is wrong because it claims ahead of schedule, but SPI < 1 means behind schedule. Option D is wrong because it claims both under budget and ahead of schedule, which is the opposite of the metrics.
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.