PMI Risk Management Professional (PMI-RMP) — Question 146

A two-year project with a budget of US$2 million has completed about 60% of the work at the end of the first year. The actual cost incurred to complete the remaining 40% of work is about US$1.5 million. As a part of performing a specialized risk analysis, the calculated schedule performance index (SPI) is 1.2 and cost performance index (CPI) is 0.53.

How should the risk manager interpret such a low CPI value?

Answer options

• A. The cost control processes are not effective.
• B. There is a problem with the cost baseline.
• C. The actual reported costs are not accurate.
• D. The cost related risks are not effectively managed.

Correct answer: D

Explanation

A low CPI indicates that the project is over budget relative to the work performed, suggesting that cost-related risks are not being addressed properly. While ineffective cost control processes and issues with the cost baseline could contribute to this situation, the CPI specifically points to poor management of cost-related risks as the primary issue. Therefore, option D is the correct interpretation.