The Cost Performance Index (CPI) is a key metric used in project management to assess the financial efficiency of a project. It is calculated by dividing the earned value (EV) of the work completed by the actual cost (AC) incurred. A CPI greater than 1 indicates that a project is under budget, while a CPI less than 1 suggests it is over budget. CPI helps project managers make informed decisions about resource allocation and budget adjustments. By monitoring this index, teams can identify potential financial issues early and take corrective actions to keep the project on track, ensuring better overall performance and success.