Cost Performance Index (CPI) Calculator
Use this calculator to determine the Cost Performance Index (CPI) of a project or task. The CPI is a key project management metric that measures the cost efficiency of planned work completed.
Enter the project's Earned Value (EV) and Actual Cost (AC). The CPI will indicate if the project is under or over budget relative to the work completed. Ensure consistent units for both values.
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Understanding the Cost Performance Index (CPI)
What is CPI?
The Cost Performance Index (CPI) is a metric used in Earned Value Management (EVM) to measure the cost efficiency of a project. It compares the value of the work completed (Earned Value) against the actual cost incurred to complete that work (Actual Cost).
CPI Formula
The formula is simple:
CPI = Earned Value (EV) / Actual Cost (AC)
Interpreting the CPI Value
- CPI > 1: The project is **under budget** for the work completed. Cost performance is better than planned.
- CPI < 1: The project is **over budget** for the work completed. Cost performance is worse than planned.
- CPI = 1: The project is exactly **on budget** for the work completed. Cost performance is as planned.
A CPI of less than 1 is usually a cause for concern, indicating potential cost overruns if performance doesn't improve.
CPI Calculation Examples
Click on an example to see the calculation and interpretation:
Example 1: Project On Budget
Scenario: Your project planned to have completed $1000 worth of work by today and has actually spent $1000.
1. Known Values: Earned Value (EV) = $1000, Actual Cost (AC) = $1000.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 1000 / 1000 = 1.00
4. Result: CPI = 1.00
5. Interpretation: The project is exactly **on budget** relative to the work completed.
Example 2: Project Under Budget
Scenario: Work valued at $5000 has been completed, but you've only spent $4000.
1. Known Values: Earned Value (EV) = $5000, Actual Cost (AC) = $4000.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 5000 / 4000 = 1.25
4. Result: CPI = 1.25
5. Interpretation: The project is **under budget** for the work completed (spending $0.80 for every $1.00 of value earned).
Example 3: Project Over Budget
Scenario: You have completed work valued at $2500, but you've already spent $3000.
1. Known Values: Earned Value (EV) = $2500, Actual Cost (AC) = $3000.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 2500 / 3000 ≈ 0.833
4. Result: CPI ≈ 0.83
5. Interpretation: The project is **over budget** for the work completed (spending $1.20 for every $1.00 of value earned).
Example 4: Early Stage, Minor Variance
Scenario: Early in a project, you've completed work worth $500 and spent $520.
1. Known Values: Earned Value (EV) = $500, Actual Cost (AC) = $520.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 500 / 520 ≈ 0.962
4. Result: CPI ≈ 0.96
5. Interpretation: The project is slightly **over budget**. While the variance is small now, it indicates a trend towards cost overruns.
Example 5: Very Efficient Performance
Scenario: A task valued at $800 was completed with exceptional efficiency, costing only $600.
1. Known Values: Earned Value (EV) = $800, Actual Cost (AC) = $600.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 800 / 600 ≈ 1.333
4. Result: CPI ≈ 1.33
5. Interpretation: The task is performing very efficiently, significantly **under budget** for the work completed.
Example 6: Significant Cost Overrun
Scenario: Work valued at $10,000 has been done, but expenses have reached $15,000.
1. Known Values: Earned Value (EV) = $10,000, Actual Cost (AC) = $15,000.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 10000 / 15000 ≈ 0.667
4. Result: CPI ≈ 0.67
5. Interpretation: The project has a significant **cost overrun**, spending about $1.50 for every $1.00 of value earned.
Example 7: Using Points/Units
Scenario: In an Agile project, you've completed 50 story points (EV) and the cost associated with the team's time for those points is budgeted at $5000, but actual cost is $5500.
1. Known Values: Earned Value (EV) = 5000 (representing the value of 50 points), Actual Cost (AC) = 5500.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 5000 / 5500 ≈ 0.909
4. Result: CPI ≈ 0.91
5. Interpretation: The team's work on these points is slightly **over budget**.
Example 8: Small Project Task
Scenario: A small task with a budget of $200 (EV) is completed for $180 (AC).
1. Known Values: Earned Value (EV) = $200, Actual Cost (AC) = $180.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 200 / 180 ≈ 1.111
4. Result: CPI ≈ 1.11
5. Interpretation: The task is **under budget**.
Example 9: CPI of 0
Scenario: You were supposed to complete $500 worth of work (EV), but no work has been completed yet (meaning EV=0) while some initial setup costs were incurred (AC=$100).
1. Known Values: Earned Value (EV) = $0, Actual Cost (AC) = $100.
2. Formula: CPI = EV / AC
3. Calculation: CPI = 0 / 100 = 0
4. Result: CPI = 0.00
5. Interpretation: The project has earned no value for the costs incurred. This indicates very poor cost performance or a very early stage with only setup costs.
Example 10: CPI Interpretation with Cost Variance (CV)
Scenario: Work valued at $7500 (EV) has cost $8000 (AC). Calculate CPI and Cost Variance (CV = EV - AC).
1. Known Values: Earned Value (EV) = $7500, Actual Cost (AC) = $8000.
2. Formula (CPI): CPI = EV / AC
3. Calculation (CPI): CPI = 7500 / 8000 = 0.9375
4. Result (CPI): CPI ≈ 0.94
5. Formula (CV): CV = EV - AC
6. Calculation (CV): CV = 7500 - 8000 = -$500
7. Interpretation: CPI of 0.94 indicates the project is **over budget**. The Cost Variance of -$500 confirms this, showing it's $500 over budget relative to the value earned.
Common Units for EV and AC
Earned Value and Actual Cost should always be measured in the same units. This could be:
- Currency (e.g., $, €, £)
- Labor hours
- Any consistent unit representing value or cost
The resulting CPI is a ratio and has no units.
Frequently Asked Questions about CPI
1. What does CPI stand for?
CPI stands for Cost Performance Index.
2. What does the CPI measure?
The CPI measures the cost efficiency of a project or task by comparing the value of work completed (Earned Value) to the actual cost spent (Actual Cost).
3. What does a CPI of 1.0 mean?
A CPI of 1.0 means the project is exactly on budget. The value of the work completed equals the actual cost incurred.
4. What does a CPI greater than 1.0 mean?
A CPI greater than 1.0 means the project is under budget. You have completed more value of work than the cost incurred.
5. What does a CPI less than 1.0 mean?
A CPI less than 1.0 means the project is over budget. You have spent more than the value of the work completed.
6. Can CPI be negative?
Typically, no. Earned Value (EV) and Actual Cost (AC) are usually non-negative values representing work completed and costs incurred. CPI is EV/AC, so it will generally be 0 or a positive number.
7. What are EV and AC in the CPI formula?
EV is Earned Value, the budgeted cost of the work performed to date. AC is Actual Cost, the real cost incurred for the work performed to date.
8. How is CPI different from SPI?
CPI (Cost Performance Index) measures cost efficiency (EV vs AC). SPI (Schedule Performance Index) measures schedule efficiency (EV vs PV - Planned Value). They are both key metrics in Earned Value Management (EVM).
9. Why is monitoring CPI important?
Monitoring CPI helps project managers identify cost overruns or savings early, allowing for corrective actions to get the project back on track regarding budget.
10. What if Actual Cost (AC) is zero?
If Actual Cost (AC) is zero, CPI is technically undefined (division by zero). In project terms, if EV is greater than zero and AC is zero, it would imply work was completed with no cost, which is generally not possible beyond initial planning stages. The calculator will indicate an error if AC is zero when EV is positive.
