Cost Performance Index Stability

Proudly Serving the EVM Community for 44 Years.
The Leader in Earned Value Management Consulting and Training

EVMS Education Center
Cost Performance Index Stability

Article by David S. Christensen and Scott R. Heise, 1993, published in the National Contract Management Journal 
The cumulative Cost Performance Index (CPI) is a useful indicator to calculate the likely final cost of a completed contract. The cumulative CPI stabilizes over the duration of a contract or project because it is a cumulative index. This article discusses the results of data analysis performed on 155 DoD contracts from 44 different programs to validate the assumption that once a contract is greater than 50 percent complete, the cumulative CPI does not change by more than 10 percent. The results of the study confirmed the assumption. The cumulative CPI is a good benchmark for comparison to the To Complete Performance Index (TCPI) to verify the EAC is reasonable - it is not overly optimistic. When the TCPI is significantly greater than the cumulative CPI after 20 percent of the work has been completed, the more likely there will be a budget overrun. As a contract progresses, the capability for future performance to significantly alter the cumulative record of past performance decreases. 
Cost Performance Index Stability Download the Cost Performance Index Stability PDF Article


/* request consultation forms JS */