Introducing Agile Earned Value Metrics
Introducing Agile Earned Value Metrics
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- March 12th, 2014
We use a few metrics and charts that are familiar to anyone who has worked in Scrum projects – burn down, velocity and cumulative flow. These help expose problems early on. And because of the binary metric of progress (done or not done), Scrum metrics are brutally honest. This level of transparency is important to our clients, even though they can trigger uneasy conversations when the metrics reveal risk or issues. The sooner you can identify performance risk, the more options you have.
One example of a tool that can be an indicator of risk is the burn down chart. A burn down chart is a lightweight, informative tool to track progress against plan. Its value lies in its simplicity. Although an effective indicator it is essentially a compass when more complex enterprise scale application projects need a GPS navigation system.
Burn down, velocity, and cumulative flow diagrams are useful for visualizing direct impact on scope and schedule and infer impact to cost. How do we produce richer information about project progress without adding unnecessary complexity? At Aspenware we have adopted Agile Earned Value Management (AgileEVM) to help us not only track and communicate performance but also drive how to decide which dials to adjust to respond to any risks. In addition to tracking schedule efficiency, AgileEVM includes estimated and actual cost information to calculate how efficiently we are spending compared to the budget. AgileEVM uses information already captured for Scrum projects so there is no additional burden to Scrum teams to produce AgileEVM metrics.
Our AgileEVM implementation was influenced by work published by Tamara Sulaiman, Brent Barton, and Thomas Blackburn. We developed our own worksheet and template to easily input our project data, calculate the metrics, and chart the results. The essential project inputs are:
- Planned Release Story Points (PSRP)
- Total story points accepted
- Total planned sprints
- Total completed sprints
- Forecasted budget at complete (BAC)
- Actual cost (AC)
With this information, we can calculate what we need for our AgileEVM analysis:
The real value is to visually show our client stakeholders how the project is performing from a schedule and cost perspective. We do this by plotting the Schedule Performance Index (SPI) and the Cost Performance Index (CPI) in a chart.
The calculations used to determine the SPI and CPI are simply:
SPI = EV / PV
CPI = EV / AC
At a glance, we can determine the schedule and cost variance and drill down into the AgileEVM metrics for deeper analysis if it is warranted. If the SPI or CPI is < 1, attention is needed to determine why. It doesn’t necessarily mean that the project is doomed or we need to re-baseline; rather, these are indicators that warrant further investigation. We may determine no action is needed. However if we do not see an improvement over a few sprints, it becomes urgent to explore available options to reverse the trend. The spreadsheet allows us to play “what-if” scenarios to help us dial into the best course of action. If SPI or CPI is > 1, it doesn’t necessarily mean that further investigation isn’t warranted either. There may be opportunities to adjust and deliver earlier or at a lower total cost.
AgileEVM is a tool that that can drive predictability and identify risks on complex software development projects. We will continue to explore AgileEVM in our next few project management blog posts. If you have specific questions regarding agileEVM please contact Aspenware Delivery Director Ken Payne or Senior Project Manager Sally Tait.
We have developed a template to help you use AgileEVM on your projects. Feel free to download the template and edit it as you see fit. Let us know about the improvements you make!