In a recent post on PM Hut, it was suggested that the Earned Value Management terms should focus on the "value" of the outcomes of a project, rather than the measures of performance for the work efforts of a project.
This is a common mistake. Many in the agile IT community make this mistake. One example is Questioning the Value of Earned Value on IT Projects. This is the PM Hut post conjecture that the "value" is earned value is not needed, what is needed is business value.
Since they are not the same, it turns out BOTH are needed. But ANSI-748B is about project is about PROJECT performance not BUSINESS performance. There is no reason to complain about ANSI EV for not addressing business performance.
There are several ways to define the business value, the best in my experience is Balanced Scorecard, with KPP's and KPI's for each strategy, connected to the programmatic performance of a project. Here's how to connect the dots between project perfomance measures and business strategy measures.
Back to the Issue At Hand
For those entering the Earned Value domain for the first time, EV’s units of measure are monetary But EV does not measure “value” to the buyer in the way suggested here.
The BCWS of earned value is the budget for the planned work. The BCWP - the earned value - is “earned” as the progress toward completion is measured. This measure is usually in “percent complete,” giving BCWP = BCWS x “percent complete.”
While some have suggested migration to the notation suggested here of PV, EV, AC, the primary users of Earned Value - the US Government and the tools used to report EV are still formatted in the standard notation (BCWS, BCWP, ACWP). The DID 81468 Contract Performance Report contains those named fields.
Project “value” is certainly an important aspect of measuring project performance. The measures of project value are best done through a business management process like Balance Scorecard with its Key Performance Parameters (KPP) and Key Performance Indicators (KPI).
As well Measures of Effectiveness (MoE) and Measures of Performance (MoP) are a means of measuring a projects value to the consumer of the project’s benefits - be they a building or space craft.
EV + Agile = Success
Just as an aside, EV is a PERFECT tool for Scrum projects where IT is being developed in a rolling wave and planning package architecture in a larger context. The "physical percent complete," needed by EV for calculating BCWP = BCWS x "physical percent complete" is EXACTLY the outcome of 100% working products at the end of each iteration. While agilest like to equate "velocity" with EV, it's not technically true, but the story points are very close to "dollars" when you exchange the points work effort in hours, then monetize those hours with the labor rate.
So don't let anyone, especially those
The Point of This Conversation
So please don't confuse the application of EV to the performance of work in support projects, with the "business value," of a project. In the Balanced Scorecard paradigm, most of the value of anything, especially IT is intangible and contains all kinds of externalities.
Be careful when reading or listening about "renaming," "reassigning," or "redefining" the established principles of ANSI-748-B Earned Value Management.
