CAPM (Certified Associate in Project Management) Practice Exam

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What does the Cost Performance Index (CPI) indicate?

  1. The ratio of planned value to actual cost

  2. The ratio of earned value to actual cost

  3. The ratio of actual cost to earned value

  4. The ratio of earned value to planned value

The correct answer is: The ratio of earned value to actual cost

The Cost Performance Index (CPI) is a key performance indicator in project management that indicates the efficiency of cost performance on a project. Specifically, CPI is calculated as the ratio of earned value (the value of work actually performed) to actual cost (the cost incurred for the work performed). Therefore, choice B is the correct answer as it accurately defines what the Cost Performance Index (CPI) indicates. In contrast: - Option A, the ratio of planned value to actual cost, refers to the Cost Variance (CV) formula. - Option C, the ratio of actual cost to earned value, is not a standard indicator in project management. - Option D, the ratio of earned value to planned value, represents the Schedule Performance Index (SPI) formula, not the Cost Performance Index (CPI).

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