Free PMI Project Management Professional Practice Question

The correct answer is that the project is over budget. The metric described in the question is the Cost Performance Index (CPI), which is calculated as CPI = EV / AC (Earned Value divided by Actual Cost). The CPI is a measure of cost efficiency in a project. A CPI value less than 1.0 indicates that the project is spending more money than planned for the work completed. Specifically:

• CPI > 1: Project is under budget
• CPI = 1: Project is on budget
• CPI < 1: Project is over budget

In this case, with a value of 0.85, the project is spending more than planned for the work accomplished. For every dollar spent, the project is only earning $0.85 in value. This suggests that cost-saving measures or budget adjustments may be necessary to improve the project's financial performance.