Historical review of cost performance index stability.

Abstract

The focus of this study is to determine when the cumulative Cost Performance Index (CPIcum) stabilizes for different contract characteristics. The CPI is the relationship between the budgeted costs for work performed divided by the actual costs of work performed. Once the CPIcum stabilizes, program managers and analyst are able to use this index as a predictor in estimating the final cost of the contract. The range method and the narrowing interval method were used to test for CPIcum stability at the 50% complete point. For the range method, stability was declared if the range, which is the maximum CPIcum value minus the minimum CPIcum value over a specified interval, was less than or equal to .20. The results for the range method indicated that the CPIcum was stable at the 50% complete point. Further analysis showed that the CPIcum was stable as early as the 10% to 20% complete point. For the narrowing interval method, stability was declared when the variance of the CPIcum is less than or equal to plus or minus .10 over a specified percent complete interval. The results for this method indicated that the CPIcum could only be declared stable from the 50% complete point.