# PMP Exam Question 112

## Cost Performance Index :

You are the project manager in the implementation of a new software in a multinational company. The total budget authorized to the schedule work is 150,000 € and the schedule baseline will last 115 days. On day 20th, the cost incurred is 30,000 € and the value of the work carried out is 25,000 €. What is the cost performance index at this stage?

A. -3.913 €
B. -5,000 €
C. 0,16.
D. 0,83.

### 3 responses on "PMP Exam Question 112"

1. PMP Solution 112

B. Cost variance (CV) is the amount of budget deficit or surplus at a given point in time, expressed as the difference between earned value and the actual cost. CV = EV – AC; 25,000 – 30,000 = – 5,000 € which is the Cost Variance.

The cost performance index (CPI) is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. It is considered the most critical EVA metric and measures the cost efficiency for the work completed. A CPI value of less than 1.0 indicates a cost overrun for work completed. A CPI value greater than 1.0 indicates a cost underrun of performance to date. The CPI is equal to the ratio of the EV to the AC. Equation: CPI = EV/AC; 25,000€/30,000€ = 0,83. Therefore, right answer is D. You can find a pdf summary of all the PMP Formulas at https://forum.openpm.org/t/pmp-formula-summary/346 [PMBOK 6th edition, Page 263] [Project Cost Management]

Cheers

2. It should be D. The question asks for CPI…

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