Strategic Cost Management
The Cost Performance Index (CPI) is a key metric used in project management to measure the cost efficiency and financial effectiveness of a project. It is calculated by dividing the earned value (EV) by the actual cost (AC), providing insight into how well a project is adhering to its budget. A CPI greater than 1 indicates that a project is under budget, while a CPI less than 1 signals potential cost overruns, which is critical in the post-audit of capital projects to assess performance and guide future decisions.
congrats on reading the definition of Cost Performance Index (CPI). now let's actually learn it.