# Example with formular Cost Performance Index (CPI), Schedule Performance Index (SPI) and Estimate at Completion (EAC)

### 7. Cost Performance Index (CPI)

Formula CPI = Earned Value / Actual Cost

The Cost Performance Index measures the cost efficiency of the project in utilizing the funds invested in it.  It is calculated through dividing earned value by actual cost. A higher CPI means that you are exceeding your budget.

A CPI of greater than 1 shows a greater cost efficiency. If the Earned value is calculated at \$15,000 and the Actual cost incurred is \$10,000 then we would calculate CPI as

Earned Value /Actual Cost

=15000/10000 = 1.5

This denotes a high cost-efficiency in the project.

### 8. Schedule Performance Index (SPI)

SPI PMP Formula:

SPI = Earned Value/Planned value

The Schedule Performance Index measures how well the project schedule is holding up against the original project plan. If the SPI is at 1, it means you are on schedule, if it is more than 1 it means you are ahead of schedule, and an SPI value that is under 1 means you are behind schedule.

Let’s imagine you have an earned value of \$7,500 and a planned value of \$10,000

In this case your SPI would be calculated as

Earned Value / Planned Value

7500/10000 = 0.75

This denotes that your project is running behind schedule.

### 9. Estimate at Completion (EAC)

EAC PMP Formula

EAC = Budget at Completion / Cost Performance Index

EAC = Actual Cost + Bottom –up Cost to Complete

EAC = Actual Cost + (Budget at Completion – Earned Value)

EAC = Actual Cost + [(Budget at Completion – Earned Value) / (Cost performance Index x Schedule Performance Index)]

Estimate at Completion is the revised estimate of the budget needed for completing the project. This may change from the original budget through additional costs or a change in prices or other unforeseen variables.

Let’s assume that the budget at completion is \$20000 and the CPI is at 0.75.

In this case you would calculate EAC as

Budget at Completion / Cost Performance Index

20000/0.75 = 26,667

This means that you will need an extra \$6,667 to complete the project at the current level of cost efficiency.

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