What Is Agile Earned Value Management (EVM)?

What is Agile earned value management (EVM)?

Agile earned value management (EVM) is a technique used to measure the performance of an Agile project in relation to three key factors:

• Cost 
• Time
• Scope

This information is often represented in a spreadsheet or a burndown chart. A project manager will use this Agile EVM chart to provide key project information to a client. Though Agile projects are always subject to change, an investor will want to have a rough idea of its cost and how much time it will take. 

History of Agile EVM

Earned value management was originally developed in the 1960s and was used successfully for many years in large-scale technical projects, as seen in the aerospace industry. However, its popularity began to wane in the 1990s as the pace of technology accelerated, meaning rigid baselines and lengthy project lifespans were no longer compatible.

After the Agile Manifesto was published in 2001 and teams began to embrace the Agile methodology in their droves, it became clear that EVM had to adapt to a more flexible approach. According to the Project Management Institute, articles “began appearing soon after the emergence of the Agile Manifesto, advocating for application of EVM to Agile projects.”

EVM was later adapted for the Scrum framework, as outlined in a 2006 article by Tamara Sulaiman, Brent Barton, and Thomas Blackburn. Today, Agile EVM is widely used, combining EVM techniques with a modern iterative model to assure project success.

Key metrics for Agile EVM

In Agile EVM, you must establish a performance measurement baseline (PMB) — this creates a reference point for you to measure progress against. To do this, you must answer three questions:

• How many Agile iterations are planned?
• How many story points are there?
• What is the budget for your release?

You will collect data at the end of every iteration or sprint. This data will include the following metrics:

• Planned value: The budget for planned work in an iteration
• Earned value: The budget for completed work in an iteration
• Actual cost: The actual cost incurred to complete an iteration deliverable

Agile EVM enables you to compare your release plan against the actual work carried out. This is important because it helps Agile teams to spot any problem areas and ensure they stay on schedule and within budget.

For more information on how to calculate earned value in project management, click here.