Western Governors University (WGU) MHRM6020 D435 HR Technology & People Analytics Practice Exam

In the context of project management, CPI stands for Cost Performance Index. This is a critical metric used to assess the financial efficiency and performance of a project. The Cost Performance Index is calculated by dividing the earned value (EV) of a project by the actual cost (AC) incurred. This ratio indicates how well the project is staying within its budget. A CPI greater than 1 suggests that the project is under budget, while a CPI of less than 1 indicates over-spending.

Understanding the Cost Performance Index is vital for project managers, as it enables them to make informed decisions regarding resource allocation and project adjustments. It provides a clear snapshot of cost efficiency, which is essential for successful project completion and maintaining stakeholder trust. This emphasis on cost performance is why CPI is a foundational concept in project management practices.