A Little Background

EVM (Earned Value Management) is targeted toward understanding costs of a project. EVM monitors project performance and enhances control by answering the following questions:

·         How much do we plan to spend and when? (Planned Value, Budgeted Cost of Work Scheduled)

·         What is the dollar value of the actual work accomplished? (Earned Value, Budgeted Cost of Work Performed)

·         How much have we spent for the work accomplished? (Actual Cost, Actual Cost of Work Performed)

·         How much do we plan to spend over the life of the project? (Budget at Completion)

·         Based on the work accomplished to date, what is out estimated cost at completion? (Estimate at Completion)

While we want to know the bottom line, we must keep in mind the differences in philosophies between Agile and Traditional (Waterfall) methodologies:

·         Waterfall methodologies constrain features and vary time and cost

·         Agile methodologies constrain time and cost and vary scope

Here are some resource pointers we've collected on earned value in an agile environment. There are some who say the two are incompatible and others who have found methods to combine the two that are acceptable to them:

http://www.niwotridge.com/PDFs/ADC%20Final.pdf

http://www.agilejournal.com/content/view/210/33/

http://leadinganswers.typepad.com/leading_answers/files/agile_and_earned_value_reporting.pdf

http://www.agilekiwi.com/agile_charts.htm

VersionOne Reporting

So, the question in respect to EVM is how do I translate these metrics to values I can use for executive level management? In other words, how does this translate to the bottom line? The metrics displayed in these reports include open estimates versus closed estimates which in a simplistic manner translate to Earned Value versus Planned Value.

Although EVM uses metrics to calculate and track planned value versus earned value, this information may not be relative in the same terms using agile methodologies since scope changes are expected and frequent, there is no hard line planned value; only per iteration as opposed to through the entire project. So the project burndown is the Planned Value versus earned value report in as much a project can be planned while expecting frequent changes.

Remembering that Agile methodologies constrain time and cost and vary scope, we conclude the most valuable data for the executive level and those concerned with the bottom line are the open versus closed items.  As long as we accurately make the translations between EV/PV and open/closed items, we can easily calculate costs, and as long as we regulate scope to meet our time restraints, we maintain our schedule:  As opposed to traditional methods where time and costs are adjusted to maintain the scope of the project.

Additionally, we can track budget versus costs using the Member Actuals report. By exporting the report to MSExcel , adding budget and cost figures, we can track our progress in terms of cost as show below:

Creating Burn Up Chart (Costs)

1.       Export Member Actuals Report to Excel

2.       Insert Column and input cost. In this scenario we input our cost per member and rolled it up to hourly cost per team.

3.       Add Budget per Iteration and Cost per Iteration rows.

4.       Add Cumulative Budget and Cost per Iteration

5.       Insert Graph

6.       (Optional) Add trend line to graph using MS Excel graph utilities.

For an example of this worksheet, see the attached file.

 

 We can see in this graph that our cost is exceeding our budget. If we were under budget, we would know that we can add additional features, or scope, to our project. If we are over budget, we have the information available to make decisions in respect to either scope change or budget, or even time constrain changes. Under the assumption that in agile methodologies, our time and cost constraints remain static, we can easily adjust our scope to meet these other constraints.

Finally, using this type of chart answers the five basic questions put forth in EVM:

·         How much do we plan to spend and when? (Planned Budget)

·         What is the dollar value of the actual work accomplished? (Total Effort)

·         How much have we spent for the work accomplished? (Actual Cost)

·         How much do we plan to spend over the life of the project? (Budget at Completion)

·         Based on the work accomplished to date, what is out estimated cost at completion? (Estimate at Completion)