A project has a Budget at Completion (BAC) of $500,000, an Actual Cost (AC) of $200,000, and an Earned Value (EV) of $180,000. What is the project's Cost Performance Index (CPI), and what does it indicate about the project's cost efficiency?
The Cost Performance Index (CPI) is calculated by dividing the Earned Value (EV) by the Actual Cost (AC). In this case, the CPI = EV / AC = $180,000 / $200,000 = 0.90. A CPI less than 1 indicates that the project is over budget and the cost efficiency is below expectations.
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