Overview
The Cost Performance Index (CPI) metric is used for measure how effective you are managing the cost in an
iteration or in a project This helps in identifying the trend of how are we spending cost against the plan.
CPI can help do a better cost management.
Measurement Method
CPI = Earned Value / Actual Cost - where
Earned Value = Value of completed work items to date in terms of the budget assigned to the work item. It can be
referred as the budgeted cost of work performed (BCWP)
Actual Cost = Total costs actually spent in completed work items to date. Cost can be cost (dollars) or effort
(person-hours).
Measurement Analysis
CPI indicates the value that we getting back from a dollar or effort we spend. CPI should be close to 1 as
much as possible. If CPI is more than one, it indicates favorable condition which shows that the team is getting more
value back than they have planned. If SPI is lower than 1, it indicates unfavorable condition which shows that the
team is getting less value back than they have planned.
From the following table, at the end of week 4 (9/26/2008), the teams plan on completed 48 hours of work but they can
only completed 36 hours of work and taking 4 hour more than expected. The CPI of this project is 0.9
(36/40). This indicates that 1 hour you have spend on the project, you only getting 0.9 hours of work completed. This
shows the unfavorable sign which can be the sign of over budget.
Dates
|
Plan Value
(person-hours)
|
Earned Value
(person-hours)
|
Actual Cost
(person-hours)
|
09/05/2008
|
6
|
6
|
6
|
09/12/2008
|
20
|
20
|
20
|
09/19/2008
|
32
|
32
|
32
|
09/26/2008
|
48
|
36
|
40
|
10/3/2008
|
87
|
|
|
|