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.