There are many voices in the market place speaking about agile and earned value management can be integrated. I am one. John Goodpastuer has good things to say. Paul Solomon. Mark Infinti. And some good presentations from the European 2010 EVA Conference. As well the Defense Acquisition University is a good resouce for EV.
But there is a critically important and subtle concept not well understood outside the EV community. There is a major difference between applying the formulas of Earned Value to a project and actually Doing Earned Value on a project.This difference is many times skipped over in the pursuit for "agile" EV, EV light, or EV without all the trappings of EV.
EV is not really about calculating the formulas, although they are important. It is about all the other activties around the formulas. The formulas are actually in only a few of the 32 criteria of EV.
Let's start with the definition of Earned Value used by those of use working the in Earned Value domain, guided by the Earned Value specification - ANSI-748B.
The criteria in color at the 11 minimal criteria needed to successfully manage a project using Earned Value. It might be said these are the criteria needed to manage a project period. Without this information you woudl not be able to determine if the project was performing to plan.
The remaining 22 criteria are part of a "validated" Earned Value Management System (EVMS) defined in ANSI-748B, guided by FAR 34.2 and DFAR 252.234-7002 and the NDIA Earned Value Management Intent Guide.
First, the full blow Earned Value management is only applicable to projects $20M or greater for government procurement subject to the FAR, DFAR, and GAO A-11 Part 7. If your project is not greater than $20M, or you have been directed through a contarct, then the motivation for EV is less. Not that it should be much less, but still less. EV as a principle is very useful. As a practice, not everyone is ready to step up to the rigor and discipline needed for success.
Next, the calculation of the formulas used in EV can be applied to any project, no matter the size. In the complete absence of 748B. These formulas are certainty useful as a starting point. If and this is a big IF, they are used in the way 748B prescribes. This includes:
- Maintaining a baseline throughout the project's period of performance is part of Earned Value
- Having some structure to assign costs. This is usually a Work Breakdown Structure. Without this the "blended" project performance can be easily hidden by "summing" the EV numbers.
- Budget should be in some unit meaningful to the decision makers. Story Points are probably not it. Dollars is common and logically the best.
Since the customer should - if they are at all sensible - be asking about total project cost and total project duration, along with the incremental delivery of "business value."
Finally, do not confuse "business value" with the "Earned Value" in Earned Value. See yesterday's post. The value in EV is Budgeted Cost for Work Performed (BCWP)(EV). It is the "earned budget." That is, the percentage of the budget - the Planned Cost - that has been "earned" at the point in time the measurement of physical percent complete (or some tangible measure of progress) was taken. So don't fall for the un-informed voices claiming Earned Value's "value" is not business. Of course it's not. Never was. Never will be. It's bogus to even suggest it.
Use both "Business Value" and "Earned Value" in the ways they are designed to be used. The way the "instruction manual" tells you to use them:
- Business Value - connected in some with the strategy, mission, vision, business balance sheet. The Balanced Scorecard is a good place to start. Value Stream Maps work well in iterative and increment environments, where "deliverables" are produced along the way.
- Earned Value - read the Gold Card