Editing Earned value management (section)

=== Cost performance index (CPI) ===
According to the [[PMBOK]] (7th edition) by the [[Project Management Institute]] (PMI), '''Cost performance index''' is a "measure of the cost efficiency of budgeted resources expressed at the ratio of earned value to actual cost."{{sfn|Project Management Institute|2021|loc=Glossary §3 Definitions}}

<math>
\begin{align}
CPI = {EV\over AC}
\end{align}
</math>

CPI greater than 1 is favorable (under budget).

CPI that is less than 1 means that the cost of completing the work is higher than planned (bad).

When CPI is equal to 1, it means that the cost of completing the work is right on plan (good).

CPI greater than 1 means that the cost of completing the work is less than planned (good or sometimes bad).

Having a CPI that is very high (in some cases, very high is only 1.2) may mean that the plan was too conservative, and thus a very high number may in fact not be good, as the CPI is being measured against a poor baseline. Management or the customer may be upset with the planners as an overly conservative baseline ties up available funds for other purposes, and the baseline is also used for manpower planning.