Earned Value Management and Agile Processes

I've recently been working with a client whose customer requires project reporting using Earned Valued Management metrics (EVM). It made me realise that, since they are also wishing to use agile methods, a paper I wrote back in 2008 could be relevant to them, and maybe a few others. When I looked for it online it was no longer available, so I thought I'd remedy that here. You can access the paper by clicking this link: EVM and Agile Processes – an investigation of applicability and benefits.

EVM is a technique for showing how closely a project is following both its planned schedule and planned costs. It's a superior method to simply reporting time and cost variance, since if the project has slipped but also underspent you cannot tell from the simple variances the degree to which the underspend has caused the slippage. EVM's cost efficiency and schedule efficiency (nothing to do with efficiency by the way!) can tell you this.

However agile methods do not have a fixed scope during their lifecycle and this can make EVM reporting effectively meaningless. The paper explains a technique for using the substitutability of User Stories, estimated in points, for overcoming this problem. If this is relevant to your business environment, I hope you find it useful.

Agile EVM has continued to develop since this paper and you can find more details and further references in the Wikipedia entry here: Earned value management: Agile EVM.

Citation: Andy Carmichael (2008). EVM and Agile Processes – an investigation of applicability and benefits, The 2nd Earned Value Management Conference, NEC, Birmingham UK, 12 March 2008.
Project Manager Today Events. www.pmtoday.co.uk.

Measuring Progress and Performance in Large Agile Developments

Large agile programmes can suffer from the worst of all worlds - management managing with "on-time-on-scope-on-budget" in mind with a methodology which is designed to allow all three of these variables to change during the project. Having spent the past 18 months grappling with this problem in one of the largest agile projects in Europe, I'm off to Denmark for the GOTO Aarhus conference next week to share some of my conclusions with delegates - and hopefully learn from others' experiences.

The concept of measurement in software projects is not new. But nor, over decades of trying, has it it been hugely successful. While it is tempting to draw up very long lists of what can and should be measured to improve team performance, I am very much of the opinion that less is more, and that the place to start is the basics. Every project must measure cost; and if they look at the calendar they can measure time. Agile methods use story points to measure size, which although it is a relative metric, only providing an estimate to the story's size compared to others in the team's backlog, it is possible to build a picture across many teams of the backlog size for a whole programme. These 3 metrics of cost, time and size are the foundation metrics that all teams need. While Earned Value Management (EVM) is a traditional method for measuring the degree to which a team is following a plan, it can be modified for use with agile projects where the scope of the backlog is dynamic. It's potentially a very powerful tool for management to home in on problem areas and it's one of the techniques that I recommend for hybrid life-cycle projects.

The 3 metrics (cost, time, size) provide the basis for moving on to more interesting but much less measurable parameters such as quality, business value and productivity. These are the real quantities we'd like to know definitively. Unfortunately "interesting" maps to "elusive". As W. Edwards Deming said, "The most important figures that one needs for management are unknown or unknowable... successful management must nevertheless take account of them".

UK Earned Value Conference announced

For another opportunity to hear my thoughts on using Earned Value analysis within agile develop- ment processes, check out this conference in London in June. My presentation is on the Wednesday (11th June) entitled Applying Earned Value in Agile Projects. I'll be reporting on the work to integrate EV analysis into the xProcess project-process improvement environment, highlighting essential modifications that make it possible to apply EV within agile projects.

EVM and Agile Processes

I am presenting a paper on EVM and xProcess next week at the 2nd EVM Conference in Birmingham, UK. I’d love to see you at the conference but if you’re not able to make it and would like a copy of the paper you can download it now from the xProcess Europe or Ivis web sites. Here's the abstract...

EVM and Agile Processes – an investigation of applicability and benefits

Earned Value Management (EVM) is a technique for understanding the degree to which a project is following a plan. A prerequisite for EVM as traditionally applied is therefore a stable baseline plan with a fixed scope. Agile processes for software development by contrast are designed to be responsive to a changing environment and enable discovery of requirements through their lifecycle. Agile plans are rarely stable or of fixed scope. However both approaches share the goal of producing plans that provide stakeholders with immediate feedback on the daily progress of projects and they share common needs in understanding and reporting progress and productivity. In addition the fact that agile processes map requirements to plannable tasks means that requirements may change without invalidating the baseline for progress reporting. This paper reports on work to develop tool support based on the xProcess process and planning product to apply EVM to agile processes. It shows how the metrics for schedule and cost efficiency can be modified for compatibility with agile approaches, and how they help effective management of agile projects, particularly when supplemented with tool support for project forecasting and monitoring.

EV for Agile

Earned Value analysis is really designed for showing how closely you are tracking a pre-defined plan. Schedule efficiency and cost efficiency give separate measures of the degree to which you are "on-time" and on-budget". The problem with agile plans is that the scope of the project is expected to change as it progresses, usually with the aim of keeping schedule and cost more or less constant. Is EV analysis simply not applicable in this case? Actually in the context of a forecasting environment like xProcess, EV can still provide some most valuable metrics to agile plans. I've been invited to present a paper on EV for agile projects in a few months time and so I'd be most interested to hear of others applying EV with plans that must vary over time. Drop me a line if that's you!

If you're interested in receiving a copy of the paper btw click here.

Searching the blog by topic

Blogspot offers some useful facilities for finding blog entries by topic. Below most entries there are a series of labels. Clicking on any of these will bring up other related articles on the same topic. Try it our with the labels below this post.

Have you earned value today?

There are many ways to track progress on projects - see "Don't burn out - burndown" for example. Burndown is particularly useful in agile projects with timeboxes where the targets are set at quite short notice - month by month for example. Earned Value (EV) analysis on the other hand is a great technique for tracking progress against a stable plan (ultra-agile teams go and read that burndown article instead of this one - stable plans are a luxury you rarely see!).

With EV tracking the value of completing tasks is calculated from its originally planned cost. There are some disadvantages of this - not least that the whole method relies on having the well-estimated plan to start from - however its advantage is that efficiency of execution can be measured day by day on the project.There are two relevant measures of efficiency that EV analysis provide: cost efficiency (how much better or worse you are doing than the baseline plan with regards the cost of the tasks you have delivered so far); and schedule efficiency (how much more or less value you have delivered at this point in time compared to the baseline plan).


xProcess supports EV analysis in the Executive Dashboards client (see screenshot). The Executive Dashboards provide an overview of multiple projects (or just one project if you like) so it's an ideal place to look at these efficiency levels in different projects. We may revisit how to use the views provided in later blog entries so watch this space.