Cost Performance Index (CPI)

The CPI is an Earned Value Management (EVM) index of contract performance. CPI is calculated by dividing the Performance (BCWP) by Actual Cost (ACWP).

CPI = (BCWP/ACWP)

The CPI is an indication of the cost efficiency with which work has been accomplished. For example, if the CPI is equal to .80, it means for every budgeted dollar spent, 80 cents in value is received. A CPI equal to 1.0 indicates that cost is on target where as a CPI equal to 1.1 indicates a cost under-run (higher efficiency).