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The Cost Performance Index (CPI) is a method for calculating the cost efficiency and financial effectiveness of a specific project through the following formula:
CPI = earned value (EV) / actual cost (AC).
A CPI ratio with a value higher than 1 indicates that a project is performing well budget-wise. A CPI value of 1 indicates that a project is performing on budget. A CPI value that is less than 1 indicates that a project is over budget.
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