Cost Performance Index (CPI) is a component of the variance analysis techniques used to measure the cost efficiency of budgeted resources expressed as the ratio of earned value to the actual cost by comparing the amount budgeted for the project (earned value or EV) to the amount spent on the project (actual cost or AC) using the following formula:

Formula:
CPI=EV/AC

Note:
If the ratio has a value:
- precisely one (1), then the project is exactly on budget.
- is greater than 1 (>1), then the project is under budget (running under the planned cost).
- is less than 1