How do you measure earned value for agile deliverables?

1 Define the planning package

A planning package is a work breakdown structure (WBS) element that represents a group of activities or deliverables that are not yet defined in detail. In agile projects, you can use planning packages to estimate the total scope and cost of the project, as well as the expected duration of each iteration or sprint. Planning packages can be refined and decomposed into smaller work packages as the project progresses and more information becomes available.

2 Assign story points and value points

Story points and value points are two ways of estimating the size and value of agile deliverables. Story points are a relative measure of the effort, complexity, and uncertainty involved in completing a user story or a feature. Value points are a relative measure of the business value, priority, and customer satisfaction delivered by a user story or a feature. You can assign story points and value points to each work package in your planning package using various methods, such as planning poker, affinity estimation, or t-shirt sizing.

3 Calculate the budget at completion

The budget at completion (BAC) is the total planned cost of the project. In agile projects, you can calculate the BAC by multiplying the total number of story points in the planning package by the average cost per story point. The average cost per story point can be derived from historical data, benchmarking, or expert judgment. Alternatively, you can use the total number of value points in the planning package and the average cost per value point to calculate the BAC.

5 Compare the earned value with the planned value and actual cost

The planned value (PV) is the value of the work planned to be completed by a certain date in the project. In agile projects, you can calculate the PV by multiplying the number of story points or value points planned to be completed in each iteration or sprint by the average cost per story point or value point. The actual cost (AC) is the actual cost incurred in completing the work so far in the project. You can compare the EV with the PV and AC to assess the schedule and cost variance (SV and CV) of the project, as well as the schedule and cost performance index (SPI and CPI).

6 Adjust and improve

One of the benefits of agile projects is that they allow for frequent feedback, adaptation, and improvement. You can use the EVM metrics and indicators to identify and address any issues, risks, or opportunities that may arise during the project. You can also use them to communicate and report the status and progress of the project to the stakeholders and customers. By measuring earned value for agile deliverables, you can ensure that your project delivers value, meets expectations, and stays on track.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?