CAPM Project Management Exam Prep

Category - Cost Management

You are the CEO receiving a report for a crucial, high visibility project, The Omega Project. Your PM reports that Omega’s schedule performance index (SPI) is sitting at 1.28 and cost performance index (CPI) at 0.88. What would you say describes Omega’s status?
  1. Omega is ahead of schedule and within its budget
  2. Omega is behind schedule and within its budget
  3. Omega is well ahead of schedule, but over-budget
  4. Omega is right on schedule, but it is running over-budget.
  5. Omega is behind schedule and over-budget
Explanation
Answer: C - When a project’s CPI is below 1.0, then your project is over its budget. If the SPI is below 1.0, then the project is behind schedule.
With Project Omega, the project is well ahead of schedule, since its SPI is above 1.28. That means it’s 28% ahead of schedule. However, is over cost at a CPI that’s below 1.0.

Key Takeaway: There’s a problem here with the way the project is being managed. In a rush to get things done, it’s possible the PM is pushing resources hard and increasing cost. An example of when this happens is if overtime hours billed at 1.5x regular rates are used.
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