What is a Cost Performance Index (CPI) value greater than 1.0 indicative of?

• A. Schedule variance is positive
• B. Cost efficiency; spending is under budget relative to earned value
• C. Project is over budget
• D. No change in cost performance

Answer: (B)

CPI measures cost efficiency of the work actually performed. It’s calculated as Earned Value divided by Actual Cost. When CPI is greater than 1.0, you’re getting more value for each dollar spent, meaning spending is under budget relative to the earned value. This shows favorable cost performance. It doesn’t address schedule status, and it indicates the opposite of being over budget. If CPI were exactly 1, cost performance is on plan; below 1 would mean cost inefficiency.