Which metric indicates cost efficiency of the work performed?

Which metric indicates cost efficiency of the work performed?

• A. Schedule Variance
• B. Cost Variance
• C. Cost Performance Index
• D. Schedule Performance Index

Answer: (C)

The metric that measures cost efficiency of the work performed is the Cost Performance Index. It is calculated as earned value divided by actual cost (EV / AC). This ratio shows how efficiently the project is converting money into completed work. If CPI is greater than 1, you’re getting more value per dollar spent, indicating cost efficiency is favorable. If CPI is less than 1, costs are running higher than the value earned, showing inefficiency. A CPI of exactly 1 means you’re exactly on budget for the work completed. This is different from cost variance, which is a simple difference between earned value and actual cost (EV - AC) and shows over- or under-spending without expressing efficiency per dollar. Schedule Variance and Schedule Performance Index, on the other hand, focus on time-related performance, not cost efficiency. CPI specifically ties cost to the amount of work actually performed, making it the best measure of cost efficiency.

The metric that measures cost efficiency of the work performed is the Cost Performance Index. It is calculated as earned value divided by actual cost (EV / AC). This ratio shows how efficiently the project is converting money into completed work.

If CPI is greater than 1, you’re getting more value per dollar spent, indicating cost efficiency is favorable. If CPI is less than 1, costs are running higher than the value earned, showing inefficiency. A CPI of exactly 1 means you’re exactly on budget for the work completed.

This is different from cost variance, which is a simple difference between earned value and actual cost (EV - AC) and shows over- or under-spending without expressing efficiency per dollar. Schedule Variance and Schedule Performance Index, on the other hand, focus on time-related performance, not cost efficiency. CPI specifically ties cost to the amount of work actually performed, making it the best measure of cost efficiency.