The formula to calculate the Cost Performance Index (CPI) is:
CPI=EVAC
Where:
A Cost Performance Index (CPI) is a ratio of the earned value to the actual cost of a company's business campaign, project, etc. It is used to measure the cost efficiency of a project. A CPI greater than 1 indicates that the project is under budget, while a CPI less than 1 indicates that the project is over budget.
Let's consider an example:
Using the formula to calculate the Cost Performance Index:
CPI=50,00045,000≈1.11
This means that the Cost Performance Index (CPI) is approximately 1.11, indicating that the project is under budget.