Cost Performance Index & Cost Variance

A project's Cost Variance (CV) is simply the difference between the Earned Value (EV) and the Actual Cost (AC). The value is positive if the budgeted cost of the work performed is greater than the actual cost of the work performed. In other words, CV is positive whether a project is under the budget.


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The Cost Performance Index (CPI) is defined as the ratio of Earned Value (EV) to the Actual Cost (AC). The value is greater than one if the budgeted cost of the work performed is greater than the actual cost of the work performed. In other words, CPI is greater than one whether a project is under the budget.

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The CPI is useful as a measure of the past performance of the project in the cost dimension. It can be used to forecast the Estimate At Completion (EAC) using the Budget At Completion (BAC), as the folowing formula shows.

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