Cost Performance Index Calculator – Project Management CPI
Calculate CPI for project cost performance analysis and budget tracking
How to Use
- Enter the Earned Value (EV) of work completed
- Input the Actual Cost (AC) incurred
- Click calculate to see your CPI and cost variance
- Interpret the results: CPI > 1 means under budget, CPI < 1 means over budget
- Use the results to adjust project budget and forecasting
What is Cost Performance Index (CPI)?
Cost Performance Index (CPI) is a measure of cost efficiency in project management. It compares the value of work completed (Earned Value) to the actual cost incurred. CPI is a fundamental metric in Earned Value Management (EVM), helping project managers assess whether a project is under or over budget.
CPI provides an objective measure of how efficiently project funds are being used. It's particularly valuable for forecasting final project costs and making informed decisions about budget adjustments.
How CPI is Calculated
The CPI formula is: CPI = Earned Value (EV) / Actual Cost (AC)
For example, if your project has completed $50,000 worth of work (EV) but has spent $60,000 (AC), your CPI would be: $50,000 / $60,000 = 0.83. This indicates the project is over budget, getting only $0.83 of value for every dollar spent.
Interpreting CPI Values
Cost Variance (CV)
Cost Variance (CV) is calculated as: CV = Earned Value (EV) - Actual Cost (AC)
CV provides the absolute dollar amount of budget variance. A positive CV means you're under budget, while a negative CV indicates you're over budget. CV complements CPI by showing the magnitude of the variance in dollar terms.
Using CPI in Project Management
Limitations of CPI
While CPI is valuable, it has limitations. It doesn't account for schedule performance (use Schedule Performance Index for that), may not reflect quality issues, and can be misleading early in a project when little work has been completed. CPI is most reliable when used alongside other project metrics like SPI (Schedule Performance Index) and when calculated at regular intervals throughout the project lifecycle.
Frequently Asked Questions
- What is a good CPI value?
- A CPI of 1.0 or higher is generally considered good, indicating the project is on or under budget. However, context matters - a CPI of 0.95 might be acceptable for a large, complex project, while a CPI below 0.90 typically signals significant budget concerns requiring immediate attention.
- How is CPI different from budget variance?
- CPI is a ratio showing cost efficiency (value per dollar spent), while budget variance (or Cost Variance) is an absolute dollar amount showing how much you're over or under budget. CPI is better for comparing projects of different sizes, while CV shows the actual financial impact.
- Can CPI predict final project costs?
- Yes, CPI can be used to forecast final costs. The formula is: Estimate at Completion (EAC) = Budget at Completion (BAC) / CPI. This assumes current cost performance will continue. For example, with a $100,000 budget and CPI of 0.8, the forecasted final cost would be $125,000.
- What causes a low CPI?
- Low CPI (below 1.0) can result from underestimated costs, scope creep, inefficient resource use, unexpected problems, poor planning, or inaccurate initial estimates. Identifying the root cause is essential for corrective action.
- How often should CPI be calculated?
- CPI should be calculated regularly, typically weekly or monthly depending on project duration and complexity. Regular calculation helps identify trends early and allows for timely corrective actions. For critical projects, more frequent calculation may be warranted.