PMP Process — Managing Technical Aspects Practice Question
A team member reports that a task is 50% complete but has consumed 70% of the budget. Which metric indicates that the project is over budget?
⚠ Common exam trap
Many candidates confuse CPI with SPI, as both are performance indices, but SPI measures schedule efficiency (EV/PV) and does not indicate budget health, leading candidates to mistakenly select SPI when the question asks about being 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)
The Cost Performance Index (CPI) is the metric that directly compares the value of work performed (Earned Value) to the actual cost incurred. A CPI less than 1.0 indicates that the project is over budget, as it costs more than planned to achieve the work completed. In this scenario, with 50% of the work done but 70% of the budget spent, the CPI would be 0.5/0.7 ≈ 0.71, confirming a cost overrun.
Answer analysis
Option-by-option breakdown
For each option: why learners choose it and why it is or isn't the right answer here.
- ✗
Budget at Completion (BAC)
Why it's wrong here
Budget at Completion (BAC) represents the total planned value for the entire project or a specific work package, signifying the complete budget authorized at the project's outset. It is a static baseline figure reflecting the total financial commitment for all work to be accomplished. While crucial for overall financial planning and setting the project's financial ceiling, BAC does not provide insight into the current cost efficiency or performance of work already completed, making it unsuitable for assessing a task's ongoing cost status.
- ✓
Cost Performance Index (CPI)
Why this is correct
The Cost Performance Index (CPI) is a critical Earned Value Management (EVM) metric that directly measures the cost efficiency of the work performed to date. Calculated as Earned Value (EV) divided by Actual Cost (AC), CPI indicates how much value is being received for each dollar spent. A CPI less than 1.0 signifies a cost overrun, meaning the project is spending more than planned for the work accomplished, directly addressing the need to assess current cost performance.
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Estimate at Completion (EAC)
Why it's wrong here
Estimate at Completion (EAC) is a forecast of the total cost required to complete all project work, typically updated based on current project performance and future projections. It represents a revised prediction of the final project cost, often calculated using various formulas depending on assumptions about future performance. EAC is a forward-looking projection of the project's ultimate financial outcome, not a metric that describes the current cost efficiency or performance of work already executed.
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Schedule Performance Index (SPI)
Why it's wrong here
The Schedule Performance Index (SPI) is an Earned Value Management (EVM) metric used to measure the efficiency of the project schedule. Calculated as Earned Value (EV) divided by Planned Value (PV), SPI indicates whether the project is ahead of or behind schedule relative to the baseline plan. While vital for tracking timeline progress and predicting schedule completion, SPI specifically addresses schedule performance and does not provide any information regarding the cost efficiency or financial status of the work completed.
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