You have recently been appointed as the Cost Engineer to oversee process improvement projects for a Discrete Part Manufacturer. You have been asked to calculate the CPI on a project initiated to implement a Value Stream Mapping Initiative. The accountant is only able to provide you with BAC and EAC figures of $ 5000 and 57500 respectively. The CPI is:
unable to be calculated from the information given
The Cost Performance Index (CPI) is calculated using the formula:
CPI = BAC / EAC
Given:
Budget at Completion (BAC) = $50,000
Estimate at Completion (EAC) = $57,500
CPI = $50,000 / $57,500 = 0.8696
Since CPI < 1, it indicates that the project is over budget. The correct answer is A. <1.
Stephen
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