How to interpret CPI < 1?

CPI (Cost Performance Index) is a measure of cost efficiency in project management, calculated as the ratio of earned value (EV) to actual cost (AC):

CPI = EV / AC

If CPI < 1, it indicates that the project is spending more than planned for the work performed. In simple terms, the cost efficiency is below expectations, and the project is overrunning its budget. For example, a CPI of 0.8 means that for every ruble spent, the project only gains 80 kopecks of completed work value.

This value signals the need to analyze the reasons for the overruns and to take corrective measures to improve cost control.