Which of the following is used to determine the cost performance index?
Pick an option to check yourself, or open the answer below.
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Correct answer: C. Budgeted cost of work performed ÷ Actual cost of work performed
Explanation
In earned value analysis the Cost Performance Index is a ratio of earned value to actual cost, i.e. CPI = BCWP ÷ ACWP (Earned Value ÷ Actual Cost). A CPI greater than 1 means the work performed cost less than budgeted, so the project is under budget, while CPI below 1 signals a cost overrun. Option (iv), BCWP − ACWP, is the Cost Variance (CV), an absolute amount rather than an index, and option (ii) divides by Budget at Completion, which instead gives the fraction of the total budget earned. Hence option (iii) is correct.More Data Structures and Algorithms questions
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