Exam PMI-001 Topic 1 Question 601 Discussion

CPI is calculated as EV/AC (in this case, $2,000/$2,500). EV measures the budgeted dollar value of the work that has actually been accomplished, whereas AC measures the actual cost of getting that work done. If the two numbers are the same, work on the project is being accomplished for exactly the budgeted amount of money (and the ratio will be equal to 1.0). If actual costs exceed budgeted costs (as in this example), AC will be larger than EV, and the ratio will be less than 1.0. CPI is also an index of efficiency. In this example, an index of 0.80 (or 80 percent) means that for every dollar spent on the project only 80 cents worth of work is actually accomplished. [Monitoring and Controlling] PMI@, PMBOK@ Guide, 2013, 224