PMI Risk Management Professional (PMI-RMP) — Question 92

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 ineffective.
• B. The cost baseline is inaccurate.
• C. The actual reported costs are inaccurate.
• D. The cost related risks are effectively managed.

Correct answer: A

Explanation

A low CPI value of 0.53 indicates that the project is over budget, suggesting that the cost control processes are not functioning effectively. The other options do not directly address the implications of a low CPI; an inaccurate cost baseline or reported costs would not necessarily lead to such a low CPI, and effective management of cost-related risks would typically result in a better CPI.