As the project manager with a cost conscience sponsor, you have been monitoring earned value throughout the year long project. At the halfway point, you report that the CPI is 0.8. This means that the project is:
A. Ahead of schedule
B. Under budget
C. Behind schedule
D. Over budget
Answer: D. Over budget
The Cost Performance Index (CPI) determines how much value you are earning per $1 spent. A CPI of 1.0 means you are on target and means that for every $1 you are putting into the project, you are getting $1 of value in return. Therefore, a CPI of 1.5 means that you are getting $1.50 for every $1 you put in, which is a good thing. Conversely, a CPI of 0.8 represents only getting $0.80 per $1, not so good. In short, over 1.0 is good, under 1.0 is bad.
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