It is common in the Agile world and other domains at times to state that Earned Value. One example of this misunderstanding comes for a site I had not heard of before.
Here is the descriptions used for an "Agile" project management method.
The description of Earned Value goes like this
Nope, This is Not Earned Value
The three variables of Earned Value are
- Planned Value or Budgeted Cost for Work Scheduled (BCWS) - this is the planned cost for the work that will be performed in the future. This budget is assigned to planned work, usually in dollars, but it can also be in hours. This planned work has a planned period of performance. This is the budget spread, that is the amount of budget planned for each time period over the period of performance for the planned work. The variable is not calculated it is defined.
- Actual Cost or Actual Cost for Work Performed (ACWP) - this is how much was spent on the work. Collecting this cost can be at the end of the total period of performance, or along the way. The measure of the ACWP at each collection point is then compared to the BCWS at that same point in time. Comparing these two measures BCWS - ACWP gives the Cost Variance (CV) of the work to date or at the end of the period of performance. This variable is not calculated it is measured.
- Earned Value or Budgeted Cost for Work Performed (BCWP) - this is the value of the work produced to date. This is compared to the Planned Value of the work that SHOULD have been produced to date. The best way to calculate this variable can be calculated as BCWP = BCWS x "physical percent complete."
So where did the author of the post go wrong?
- Earned Value is not how much budget and time "should" have be spent. That is BCWS. That's the planned spend at any point in time.
- Here's the Gold Card that shows how Earned Value works.
For Agile Projects, What Can Earned Value Provide?
In fact if you're doing agile and doing it right, Earned Value provides little value (so to speak). However, if you doing Earned Value projects, and want to add Agile, that is straightforward. Here's how.
In the end "earned value" can make use of Agile. But "earning" the value is NOT the measure of the passage of time and consumption of money or resources, as suggested by the poster. It is the measures of the "value" produced by the consumption of resources and passage of time.
That is if we invested $100 and did that over a week, did we get a $100 in value from that investment? A simple way to calculate that measure is to ask what percent complete were we at the end of the week?
If we were only 90% complete, when we had planned to be 100% complete, but had spent out $100, then we are only 90% of our planned schedule progress, but are 100% of our planned budget. So we are 10% late and 10% over budget.
