What is Cost Performance Index (CPI)?
CPI measures cost efficiency: how much value the project earns for every dollar spent. A CPI of 1.0 means you're exactly on budget; below 1.0 means over budget; above 1.0 means under budget.
On the exam, remember that CPI is the most-watched single number in EVM — it feeds the estimate at completion (EAC) forecast, and research consistently shows CPI stabilizes early, which is why a project 20% in with a CPI of 0.85 rarely "catches up" on its own.
Formula
CPI = EV ÷ AC
Worked example
EV = $35,000, AC = $42,000. CPI = 35,000 ÷ 42,000 = 0.83. Read it as: "for every dollar we spend, we're getting 83 cents of work." Below 1 is over budget; above 1 is under budget.