If a project has a cost performance index (CPI) of 1.0, what does it reflect about the project?

When a project has a cost performance index (CPI) of 1.0, it indicates that the project is precisely on track regarding its budget. The CPI is calculated by dividing the earned value (EV) by the actual costs (AC). A CPI of 1.0 means that the value of the work performed is equal to the actual costs incurred; thus, the project is neither under budget nor over budget.

While the CPI provides insight into the project's cost efficiency, its interpretation in terms of schedule or timeline may not be directly assessed solely from the CPI value. However, for the context of this question, a CPI of 1.0 suggests a stable financial status aligned with the planned budget.

Therefore, the correct interpretation that aligns with achieving the budget requirements is that the project is meeting budget and schedule, assuming the two aspects are not inherently disconnected. This understanding is crucial for project managers as they assess and communicate the project's financial health.