According to the PMBOKGuide, the Cost Performance Index (CPI) is the most critical Earned Value Management (EVM) metric for measuring the cost efficiency of a project.
* The Formula: $CPI = \frac{EV}{AC}$ (Earned Value divided by Actual Cost).
* Interpreting a CPI > 1.0: A value greater than 1.0 indicates that for every dollar spent on the project, more than one dollar ' s worth of work was actually accomplished. This means the project is performing more efficiently than planned and is currently under budget (cost under the estimated value).
* Benchmarking Performance:
* CPI = 1.0: The project is exactly on budget (Cost = EV).
* CPI < 1.0: The project is over budget (Cost > EV).
* CPI > 1.0: The project is under budget (Cost < EV).
Analysis of Other Options:
* A. Cost right at the estimated value: This would result in a CPI of exactly 1.0.
* C. Cost right at the actual value: This is a tautology; actual cost is always the actual value spent, but CPI measures that against the value earned.
* D. Cost over the estimated value: This would result in a CPI of less than 1.0 (e.g., 0.85), indicating cost inefficiency.