Anticlue

CPI and CV Components

Cost Performance Index (CPI) is the ratio of costs budgeted to perform the work to actual costs to perform the work or BCWP vs ACWP. The formula is CPI=BCWP/ACWP. A CPI greater than one indicates a favorable result or cost under-run. A value of less than one reporesents a cost overrun. The use of CPI and CV calculations help IT project managers to ascertain if the spending trend is positive, negative, or neutral in relation to the work performed.

Cost Variance (CV)is the difference between the costs budgeted for an activity and the actual cost to finish that activity. The formula is CV = BCWP-ACWP. A positive reult indicates that the project in under budget, and a negative result means that the budget is overrun.