PMP Process — Managing Technical Aspects Practice Question
A project manager is using earned value management. At month 6 of a 12-month project, the EV is $50,000, PV is $60,000, and AC is $55,000. What is the cost performance index (CPI)?
⚠ Common exam trap
It's easy for candidates to confuse CPI with SPI, mistakenly dividing EV by PV (which gives SPI) instead of EV by AC, leading to the incorrect answer 0.83 (Option A).
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
✓
0.91
The Cost Performance Index (CPI) is calculated as EV / AC. Here, EV = $50,000 and AC = $55,000, so CPI = 50,000 / 55,000 = 0.909, which rounds to 0.91. A CPI less than 1 indicates the project is over budget, as the cost incurred ($55,000) exceeds the value of work performed ($50,000).
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
0.83
Why it's wrong here
This value represents the Schedule Performance Index (SPI), calculated by dividing Earned Value (EV) by Planned Value (PV). An SPI of 0.83 indicates that the project is currently progressing at only 83% of the rate planned, meaning it is behind schedule. While a critical metric for assessing schedule efficiency, it does not measure cost efficiency, which is the purpose of the Cost Performance Index (CPI).
- ✗
1.20
Why it's wrong here
This value is derived from dividing the Actual Cost (AC) by the Planned Value (PV), which would be 55,000 / 60,000 based on typical EVM figures. This specific ratio, while a calculable number, does not correspond to a recognized or standard performance index within Earned Value Management. It does not provide actionable insight into the project's cost efficiency relative to work accomplished or schedule adherence.
- ✓
0.91
Why this is correct
This value correctly represents the Cost Performance Index (CPI), which is calculated as Earned Value (EV) divided by Actual Cost (AC). With EV of 50,000 and AC of 55,000, the CPI is 50,000 / 55,000 ≈ 0.91. A CPI of 0.91 indicates that for every dollar actually spent, only $0.91 worth of work has been earned, signifying that the project is currently over budget and operating inefficiently.
- ✗
1.10
Why it's wrong here
This value represents the reciprocal of the Cost Performance Index (CPI), calculated as Actual Cost (AC) divided by Earned Value (EV). While it quantifies that for every dollar of work earned, $1.10 has been spent, it is not the standard CPI metric used in Earned Value Management. The PMP standard defines CPI as EV/AC, where a value less than one directly indicates cost overrun.
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