Interpretation of Cost Performance Index

1. CPI < 1: If the CPI is less than one then the earning is less than the amount spent. In other words we can say that project is over budget.
2. CPI > 1: If the CPI is greater than one then the earning more than the amount spent. In other words we can say that project is under budget.
3. CPI = 1: If the CPI is equal to one then the earning and spending are equal. It can state that project is proceeding exactly as per the planned budget.

The Cost Performance Index (CPI) helps us to analyze the efficiency of the cost utilized by the project. CPI computes the value of the work completed compared to the actual cost spent on the project. The Cost Performance Index (CPI) can be defined as a measure of the cost efficiency of budgeted resources expressed as a ratio of earned value to actual cost.

The Cost Performance Index describes how much you are earning for each rupee or dollar spent on the project. The Cost Performance Index is evidence of how well the project remains on budget.