In a project, the cost performance indicator (CPI) is less than 1 and the schedule performance indicator (SPI) is more than 1. What is the status of the project?
A.
The project is over budget and behind schedule.
B.
The project is over budget and ahead of schedule.
C.
The project is under budget and behind schedule.
D.
The project is under budget and ahead of schedule.
The project is over budget and ahead of schedule . In earned value management, the Cost Performance Index is calculated as earned value divided by actual cost. PMI defines CPI as a measure of cost efficiency expressed as the ratio of earned value to actual cost. A CPI less than 1 means the project is earning less value than the money being spent; therefore, cost efficiency is unfavorable and the project is over budget. The Schedule Performance Index is calculated as earned value divided by planned value. PMI defines SPI as a measure of schedule efficiency expressed as the ratio of earned value to planned value. An SPI greater than 1 means the project has earned more value than planned by the measurement date; therefore, schedule efficiency is favorable and the project is ahead of schedule. The combination is mixed performance: schedule is positive, cost is negative. This is a classic earned value interpretation question and should be solved by remembering the threshold value of 1.0: below 1 is unfavorable, equal to 1 is on target, and above 1 is favorable. References/topics: Earned Value Management, CPI, SPI, Cost Control, Schedule Control.
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