What is the target range for a desirable Cost Performance Index (CPI)?

The Cost Performance Index (CPI) is a critical metric used in project management to assess the cost efficiency and financial effectiveness of a project. A CPI of 1.0 indicates that the project is on budget; values greater than 1.0 signify that the project is under budget, while values below 1.0 indicate overspending relative to the planned budget.

The target range for a desirable CPI is typically between 0.95 and 1.05. This range demonstrates that the project is effectively managing its costs and maintaining financial discipline while allowing for slight variations that may occur in the course of project execution. A CPI within this range suggests that the project manager and team are managing expenditures effectively, balancing cost and performance without straying too far from the original budget.

Values below 0.95 may indicate a risk of budget overruns, while values above 1.05, although not inherently negative, show a capacity for spending less than expected but can also bring about caution if perceived as potential under-utilization of resources.

In summary, aiming for a CPI between 0.95 and 1.05 reflects a healthy financial status for a project, encouraging efficient resource usage while keeping costs under control.