Agile earned value management
Agile earned value management
Variance and trend analysis
Unlike traditional project management methods that evaluate risk and variance and trends in formal meetings, agile incorporates risk analysis and variance and trend analysis into iteration review meetings.
Risk and variance and trend analysis may be performed in agile using information radiators, like a risk burndown chart, and the use of traditional earned value management (EVM) to measure cost and schedule variance (CV and SV, respectively).
[Agile Estimating and Planning. Mike Cohn.]
EVM
EVM or earned value management is a management technique used to evaluate project performance with respect to cost and schedule.
EVM relies on other common financial metrics like :
Budget At Completion (BAC),
Actual Cost (AC),
Planned Value (PV),
Earned Value (EV),
Cost Variance (CV),
Schedule Variance (SV),
Cost Performance Index (CPI), and
Schedule Performance Index (SPI).
BAC is the total project budget.
[Agile Estimating and Planning. Mike Cohn.]
CV and SV can be converted into performance indicators of CPI and SPI, respectively, and tracked and charted to show progress over time.
BAC is the total project budget.
AC is the actual cost incurred to date.
PV is the planned value of work at a given time in a project
You can calculate it by multiplying the BAC by the ratio of current week/scheduled weeks (e.g., 5 weeks into a 15 week $15,000 project = $5,000 PV).
EV is value of work actually completed or earned (e.g., you have completed 50% of the project by week 5 of a 15 week $15,000 project = $7,500 EV).
CV is the difference between what a project has earned to date and cost to date (i.e., CV = EV – AC).
SV is the difference between what a project has earned to date and what it was planned to earn to date (i.e., SV = EV – PV).
CPI is a ratio that expresses cost performance.
CPI = EV/AC. If CPI > 1, the project is earning more than spending;
CPI 1, the project is ahead of schedule
SPI < 1, the project is behind schedule.
[Agile Estimating and Planning. Mike Cohn.]
SPI
Schedule Performance Index (SPI).
SPI is a ratio that expresses schedule performance.
SPI = EV / PV.
SPI > 1, the project is ahead of schedule
SPI < 1, the project is behind schedule.
AC is the actual cost the project has incurred to date.
[Agile Estimating and Planning. Mike Cohn.]
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