In Earned Value Management (EVM), as defined in the PMBOK Guide, the Cost Performance Index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as the ratio of earned value to actual cost.
* Formula: $CPI = \frac{EV}{AC}$
* Calculation: Given the values:
* Earned Value ($EV$) = $\$2,000$
* Actual Cost ($AC$) = $\$1,500$
* $CPI = \frac{2000}{1500} = 1.333...$
* Rounding: Following standard examination conventions, the result is rounded to two decimal places, which is 1.33.
Interpretation of Results:
* A CPI of 1.0 indicates that the project is exactly on budget.
* A CPI greater than 1.0 (like the 1.33 in this case) indicates that the project is performing better than planned in terms of cost (i.e., for every dollar spent, the project has earned $\$1.33$ in value).
* A CPI less than 1.0 indicates that the project is over budget.
Note: The Planned Value ($PV$) of $\$1,000$ is provided in the question but is not used to calculate the Cost Performance Index; it would be used if you were calculating the Schedule Performance Index ($SPI = \frac
{EV}{PV}$) or Schedule Variance.