A project is one week behind at the time of the calculation. “…a project has two people working full time, and that each person costs the company $1,250 a week. The small business website Chron provides this example of how one determines the SPI and CPI in a given setting. Additionally, in both the context of the PMP® exam setting and later as an active PMP® credential holder, the Project Manager should be able to interpret what the CPI and SPI mean to a project’s schedule and budget respectively. SPI and CPI are key calculations in Earned Value Management and are critical concepts for the PMP® certification exam. Although its highly unlikely, students may be asked to do straightforward calculations of either the CPI or the SPI as part of the PMP® exam, with numbers not necessitating the use of a calculator. Schedule Performance Index Value Meanings In this scenario, the project manager can use the same CPI formula for the PMP® exam, in that CV = AC/EV. The project budget is $100,000 with 40% of the work completed.įrom that description, you have this information: Your project has a one-year timeline and you are at the halfway point. General Business Project Example 2ĭetermine the Cost Performance Index (CPI) and if the project is under, at, or over budget. It could be everything on the project is going better than ever planned however, a savvy project manager will use the CPI and other formulas to monitor progress and adjust accordingly. The training and experience needed to become a PMP® credential holder means the Project Manager will look to see if the under budget indicates poor estimating or costs that have been deferred but will be incurred later. Yes, the Project Manager should be relieved, but being under budget at a point is not a guarantee for success. Actual costs to date have been $900.ĬPI of 1.25, which means the project is 25% under budget (the. Bathroom Renovation CPIĪ simple example is a residential bathroom renovation project, in which there is an overall $1,500 and is 40% complete. Consider these examples from various project management and PMP® exam resources. Cost Performance Index Calculation ExamplesĬalculating the CPI is not a complicated mathematical process, it is merely simple division and knowledge of how to interpret the resulting data. in the context of re-estimation of budgets. The CPI is also used to project cost incurrence for the future periods of a project, e.g. The CPI could indicate the initial budget was not aligned with the project outcomes or estimates were too conservative. With or without a PMP® certification, Project Managers can use the CPI to tell the overall story of the project status from a financial perspective. 1ĬPI in project management measures the cost efficiency of a project. Using the formula CPI = EV / AC, the project manager will have a value of less than 1 (project over budget), of 1 (project on budget), or greater than 1 (project under budget). Calculating Cost Performance IndexĬalculating Cost Performance Index provides insight into the budget health of the project. Anyone with project management responsibilities can use the Cost Performance Index (CPI) calculation to better manage their schedule and budget. Some may refer to this formula as the “PMP Cost Performance Index” but that is only due to the inclusion of the tool within the PMP® certification exam.
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