Cost performance index cpi per project is one of the most important kpis in project management. Pmbok chapter 7 project cost management flashcards. Conference paper cost management, estimating 10 may 2011. In this pmp study guide, well cover all the processes in the cost management knowledge area in pmbok 6th edition. In addition to etc, estimate at completion, and to complete performance index are also used for project forecasting. This document supersedes pmis project management body of knowledge pmbok document that was published in 1987. It is sometimes used in conjunction with the cost performance index cpi to forecast the final project completion estimates. Pmp formulas mentioned in the pmbok guide 5th edition name abbreviation formula interpretation no. Feb 07, 2019 while cv provides a dollar amount that reflects how much over or under the project is at a particular point in time, the cost performance index cpi provides an indicator of the overall cost.
Jan 30, 2020 cost variance and cost performance index formulas explained understand these thoroughly, these are required to be used in some questions in pmp exam exam simulator. Cost performance index project management knowledge. We will continue to share updates on our standards transformation. It shows how well the project is sticking to the budget.
The projected cost performance the remaining work of the project must achieve in order to meet the original budget or a new approved one. Earned value formulas, part two linkedin learning, formerly. How to use to complete performance index tcpi formulas in. Mar 12, 2020 variance analysis is the quantitative investigation of the difference between actual and planned behavior. Cost performance index cpi allows to compare the progress of projects of different scopes unlike cost variance that shows the difference in dollars between baseline project. According to the pmbok guide, the schedule performance index spi is a measure of schedule efficiency, expressed as the ratio of earned value to planned.
While cv provides a dollar amount that reflects how much over or under the project is at a particular point in time, the cost performance index cpi provides an indicator of the overall cost. Schedule variancesv, cost variancecv, schedule performance index spi, and cost performance index cpi. Cost variance the difference between earned value and actual costs incurred. If cpi 1, that means ev ac so you are under budget. Project management is about optimizing time, cost, and quality performance on projects. Having a cpi that is very high in some cases, very high is only 1. Construction cost management is the most important function for project success and the construction project performance is generally expressed in terms of cost and its variance from the budget. Organizational process assets tools and technqiues 1. The amount of budget deficit or surplus at a given point in time, expressed as the.
A measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost. In the most recent edition of the pmbok guide, evm is listed among the general tools and. Pmp pmbok 5th edition chapter7 project cost management. Project cost management inputs, tools and techniques, and outputs based on pmbok guide, 6th edition 5 jan, 2018 stefania updated 14 jan, 2018 here your free guide to project cost management inputs, tools and techniques, and outputs. Earned value management evm is a technique used in project management to measure progress of a project with respect to cost. To control costs on the project the pm has to monitor expenditures, prepare cost forecasts, compare realized costs against the cost baseline and manage changes to it using change control process. The cost performance index is the earned value divided by the actual cost of the projecttodate. Forecasting project management for experts goskills. Download and keep this useful defense acquisition university dau gold card. To assist users of this document who may be familiar with its predecessor, we have summarized the major differences here. Cost performance index a measure of the cost efficiency of budgeted resources expressed as the ratio of earned value to actual cost. According to the pmbok guide, the cost performance index cpi is a measure of the cost efficiency of budgeted resources, expressed as a ratio of earned value to actual cost. Best pmp study material, online training and study guide. Pmbok guide and standards project management institute.
Undistributed budget broadly defined activities not yet distributed to cas. We remain committed to providing our customers with unparalleled value over the course of their careers. The standard for project management and a guide to the project management body of knowledge pmbok guide will be the first standards products to transform. Sumss the approved budget expenditures by time period, and is displayed as an scurve showing accumulated expenditures over time. Kpi library is a community for performance management professionals. Materials in this class are based on the a guide to the project management body of knowledge, pmbok guide sixth edition, project management institute inc. Pm world journal project cost management based on pmbok. Use kpi library to search for key performance indicators by process and industry, ask help or advice, and read articles written by independent experts. It is the ratio of earned value ev to actual costs ac. Schedule performance index spi and cost performance index cpi in evm. You can use it to create tasks, track task performance, and modify project details to streamline your workflow. However, the cost variance is usually negative and the cpi is usually less than 1. Project management institute a guide to the project management body of knowledge pmbok guide fifth edition licensed to. Work package nearterm, detail planned activities within a ca.
The cost performance index specifies how much you are earning for each dollar spent on the project. Earned value management free project management excel. Pmp formulas and calculations advanced guide with examples. Earned value management also called earned value analysis is a methodology that combines the measurements from scope, schedule, and resource management resources cost money and affect the schedule to form a performance measurement baseline. Also find the formulas and calculations of these evm terms. It is the cost efficiency required to complete a project within a defined budget. It is then compared against the allocated budget for the work to understand whether team has spent more.
In this course, you will consider the general approaches to cost management, such as the methods that are used to estimate and budget for project costs. To complete performance index tcpi can be defined as the projected cost efficiency of completing the remaining work of a project within the original or revised budget. Its an important activity in project communication management. It involves collecting and disseminating project information, communicating project progress, utilization of resources, and forecasting future progress and status to various stakeholders, as decided in the communication management plan. After learning to effectively plan cost management, youll look at how costs are estimated, budgets developed, and costs controlled.
It measures how efficiently the project team is using its time. Tocomplete performance index project management knowledge. The index can be calculated for the entire project or for a subset of tasks, such as all of phase 3, or all the tasks performed by the it organization. Chapter 8how do you calculate the cost performance index cpi chapter. To complete performance indextcpi in evm pmbok guide 6. Control costs is a project management activity where actual cost of work performed is measured. Pmbok 6th edition pdf download for pmp certification. Download pmp formula sheet and pmp cheat sheet for free. The tocomplete performance index tcpi is a tool in project management that is used to measure the cost performance required needed to be achieved using the remaining resources to meet a specific project management goal. Please read chapter 7 from project management institute, a guide to the project management body of knowledge, pmbok guide fourth edition, project management institute, inc. You may download or print material from the site only for your own personal. Click here for a detailed analysis of each project management process group and knowledge area.
You will use this baseline to measure project performance. Understand formulas and calculations for the pmp exam in an easy and approachable way. Although estimating cost and determining budgets can be one process on small projects, pmi separates them into two processes because the exam assumes the pm is managing a large project. Pmbok guide sixth ed pdf is available for download free of cost for pmi members. Download pmbok guide 6th edition pdf free for pmi members.
Since cost performance index cpi is less than one, this means the project is over budget. Pmi first picked up on evm as a project management cost control tool in the. Schedule performance index spi and cost performance index. To complete performance index efficiency needed from time now to achieve a bac, eac, or lre. Cost performance index cpi allows to compare the progress of projects of different scopes unlike cost variance that shows the difference in dollars between baseline project cost cost and actual cost of a project. Click here to download the pmp formulas table for free. This technique is used for determining the cause and degree of difference between the baseline and actual performance and to maintain control over a project. Cost performance baseline, an authorized timephased budget used to measure and monitor project cost performance. To control costs on the project the pm has to monitor expenditures, prepare cost forecasts, compare realized costs against the cost baseline and manage changes to it using change control process control costs is a project management activity where actual cost of work performed is measured. The process of monitoring the status of the project to update project costs and. The cost performance index can change over the life of a project depending on the ways in which the earned values and actual cost have changed. It feels complicated and has the mystical air of mathematical magic and wizardry.
Project cost management for project managers based on. The schedule performance index spi is a measure of schedule efficiency expressed as the ratio of earned value to planned value. This paper examines the tocomplete performance index tcpi as one of the. There are two indices, a cost performance index cpi and schedule performance index spi. If cpi cost variance cv cost variance cv is the difference between. In this article, we will cover the basics of evm, why it is useful and also a free excel template which will help calculate the metrics for us. All the minor budgets are added together to create the overall cost performance baseline, which is displayed as a graph of cumulative funds to be spent over time. Dec 06, 2015 etc is used for forecasting future performance of a project. If everything is going according to plan the cost variance is 0 and the cpi is 1.
Sep 22, 2018 pmbok 6th edition pdf download for pmp certification. But theres little your project sponsor, your client, or their finance director care about more than your budget and how closely you can stick to it. Project cost management for project managers based on pmbok. Use this template to manage and organize any project effectively. A value equal to or greater than one indicates a favorable condition and a value less than one indicates an unfavorable condition. This can lead to gaming the sv and schedule performance index or spi metrics by. A category of contract that involves payments to the seller for all legitimate actual costs incurred for completed work, plus an award fee representing seller profit. This term is defined in the 3rd and the 4th edition of the pmbok.
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