CPI and SPI: The under-rated indicators
Six months into a year-long project your CPI is 0.8. However, your SPI is 1.2. This means that the project is:
A. Ahead of schedule and under budget
B. Ahead of schedule and over budget
C. Behind schedule and under budget
D. Behind schedule and over budget
Answer: B. Ahead of schedule and over budget
For both Cost Performance Index (CPI) and Schedule Performance Index (SPI), 1.0 is exactly as planned, over 1.0 is good and under 1.0 is bad. So in this case, the CPI is bad and SPI is good. In this example, the CPI means you are getting $0.80 of value out of every $1 spent (see CPI — what is it trying to tell me?) while the SPI means you are progressing at 120% (i.e. 20% better than planned) of the baseline.
CPI — what does it mean?
As the project manager with a cost conscience sponsor, you have been monitoring earned value throughout the year long project. At the halfway point, you report that the CPI is 0.8. This means that the project is:
A. Ahead of schedule
B. Under budget
C. Behind schedule
D. Over budget
Answer: D. Over budget
The Cost Performance Index (CPI) determines how much value you are earning per $1 spent. A CPI of 1.0 means you are on target and means that for every $1 you are putting into the project, you are getting $1 of value in return. Therefore, a CPI of 1.5 means that you are getting $1.50 for every $1 you put in, which is a good thing. Conversely, a CPI of 0.8 represents only getting $0.80 per $1, not so good. In short, over 1.0 is good, under 1.0 is bad.
Calculating Schedule Performance Index (SPI)
If EV = 25,000, PV = 30,000, and AC = 29,000, what is the SPI?
A. 0.83
B. 0.86
C. 1.16
D. 1.20
Answer: A. 0.83
SPI (Schedule Performance Index) is calculated by EV (Earned Value)/PV (Planned Value). The 0.83 means that the project is progressing at 83% of the baseline.
Calculating Cost Performance Index (CPI)
If EV = 25,000, PV = 30,000, and AC = 29,000, what is the CPI?
A. 0.83
B. 0.86
C. 1.16
D. 1.20
Answer: B. 0.86
CPI (Cost Performance Index) is calculated by EV (Earned Value)/AC (Actual Cost). The 0.86 means that the project is getting 86 cents out of every dollar.
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