Cost Performance Index (CPI)
Ratio of budgeted to actual cost for work completed; below 1.0 indicates cost overrun
What is Cost Performance Index (CPI)?
Cost performance index is a project management measure that compares the value of the work done with the amount actually spent to do it. It shows how efficiently a project is using its budget.
A value above 1 means the project is getting more value than it costs, and below 1 means it is over budget.
How this KPI is measured
- Function
- Strategy & Projects
- Sub-function
- Cost Control
- Industry
- Construction & Engineering
- Type
- Lagging
- Impact
- Financial control
- Unit
- x
- Measurement frequency
- Monthly
- Formula
- Earned Value / Actual Cost
How to calculate it
Divide earned value by actual cost.
For example, if the work completed to date is worth 800,000 at budget rates and 1,000,000 has been spent, CPI is 0.8.
Earned value is the budgeted cost of the work actually completed. A CPI of 0.8 means each unit spent delivers only 0.8 of planned value.
Where it is used
Tracking cost efficiency
See if spend delivers value.
Forecasting final cost
Estimate the outcome.
Early warning
Spot overruns.
How to improve it
Tips and common mistakes
- The result depends on accurate progress measurement.
- Trends matter as much as the current value.
- Read with schedule variance.
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