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What are the benefits and challenges of using earned value analysis in agile projects?

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Earned value analysis (EVA) is a method of measuring project performance by comparing the actual work done, the planned work, and the budget. EVA can help project managers monitor progress, identify deviations, and forecast outcomes. However, applying EVA to agile projects, which are characterized by iterative and adaptive delivery, can pose some benefits and challenges. In this article, we will explore how EVA can be used in agile projects, what are the advantages and disadvantages of this approach, and what are some best practices to follow.

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1 EVA basics

EVA uses three key metrics to assess project performance: planned value (PV), earned value (EV), and actual cost (AC). PV is the budgeted amount of work that should have been completed by a certain date. EV is the value of the work that has been actually completed by that date. AC is the actual amount spent on the work done by that date. EVA calculates the variance and the performance index for each metric, as well as the estimate at completion (EAC) and the estimate to complete (ETC) for the whole project.

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Gregory Gmys

My #1 Business Coach - Providing International and Domestic Executive Leadership Direction for Business
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I would caution, before utilizing EVA results to estimate the (EAC) Estimate at Completion for the whole project, that each individual work item (budget item) be independently calculated, assessed and confirmed, prior to rolling up the individual performance into a collective EAC. Further giving caution to validated physical completion versus calculated earned progress complete.

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2 EVA benefits

EVA can provide several benefits for agile projects, such as aligning the project scope, schedule, and budget with the business value delivered. It also provides a consistent and objective way of measuring and reporting project progress and performance, while enhancing the transparency and accountability of the project team and customer. Furthermore, it supports decision-making and risk management processes by identifying deviations, issues, and opportunities. Finally, it enables continuous improvement and learning by using feedback and data to adjust the project plan and agile practices.

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Nahush Jadhav, CAPM?

Program and Operations Manager at Aanuj Enterprises | MBA&E | CAPM?
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Benefits of using Earned Value Analysis (EVA) in Agile projects include: Objective Performance Measurement: EVA provides objective metrics to measure project progress, allowing stakeholders to gauge performance accurately. Early Identification of Issues: It enables early identification of cost and schedule variances, allowing for timely corrective actions to be taken. Improved Forecasting: EVA facilitates more accurate forecasting of project completion dates and costs, aiding in better decision-making.

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Charles Lindsay

Project Services
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Generally, EVA varies over time based on the stages of the project. Early on there is setup / learning curve. During the middle there is a period of synergy / max output. At the end there is a non-productive finishing component. EVA needs to be used as one of the tools for evaluation and compared to a holistic view, including go and see.

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3 EVA challenges

EVA can present some challenges for agile projects, such as defining the PV and EV for each iteration or sprint, accounting for the AC of the project team, integrating the EVA data with agile tools and methods, and communicating and interpreting the EVA results. This may involve varying sizes, durations, and scopes depending on customer feedback and project priorities. Additionally, it may include fixed and variable costs, overheads, and shared resources that are not easily allocated to each iteration or sprint. Furthermore, different units and scales of measurement may need to be used in relation to the backlog, burndown chart, velocity, and user stories. It is also important to provide additional explanation and context when communicating the EVA results in order to avoid confusion or misalignment with agile values and principles.

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Nahush Jadhav, CAPM?

Program and Operations Manager at Aanuj Enterprises | MBA&E | CAPM?
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Adaptation to Agile Principles: Traditional EVA may conflict with Agile principles due to its focus on detailed planning and fixed scope, which may not align well with Agile's iterative and flexible nature. Granularity of Data: Agile projects often work with smaller increments of work, making it challenging to track and measure progress accurately using EVA metrics. Complexity in Interpretation: Agile projects can have rapidly changing requirements and priorities, leading to complexities in interpreting EVA metrics and trends. Cultural Resistance: Agile teams may resist adopting EVA due to its perceived bureaucratic nature, potentially hindering its effectiveness in Agile environments.

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4 EVA best practices

To leverage the benefits of EVA in agile projects and overcome the related challenges, there are some best practices to follow. For instance, it is important to define the PV and the EV based on the business value or customer satisfaction of each iteration or sprint, rather than technical or functional requirements. Additionally, relative or normalized units, such as story points or function points, should be used to measure the PV and the EV, and then converted to monetary values with a common conversion factor or weighted average. Furthermore, AC of each iteration or sprint should be tracked using a consistent method such as hours worked by the project team or percentage of budget allocated. It is also recommended to combine EVA data with agile metrics and indicators such as backlog size, burndown rate, velocity, and user feedback for a comprehensive view of project performance. Finally, EVA results should be communicated and presented using visual and interactive formats such as dashboards, charts, and graphs with an explanation of meaning and implications in relation to agile goals.

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5 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?

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Oseghale Okohue BEngr. Msc. MBA. DBA. Prince2?Practitioner

Accredited NEC4 ECC Project Manager & Snr. P6 Planner | EPICM, Offshore Engineering,Renewable Energy (HVDC & HVAC Power Cables, Wind, Solar, BESS, Grid Code Compliance (G99, G5/5, P28) & Integration, GIS/AIS Sub-Station)
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In agile projects, earned value analysis offers benefits like enhanced visibility into project progress and cost performance. However, challenges include adapting traditional metrics to agile methodologies and reconciling iterative development with fixed project baselines. For example, in energy projects, integrating earned value analysis with agile practices can provide insights into project efficiency but may require flexible measurement approaches to account for evolving requirements and deliverables.

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Sal Bousleiman, PE, CCP

Director of Project Controls at Tutor Perini Corp.
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It would be great to try and correlate the EVA results with the PPC to see if careful planning contributes to better SPI and CPI metrics.

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What are the benefits and challenges of using earned value analysis in agile projects?

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1 EVA basics

2 EVA benefits

3 EVA challenges

4 EVA best practices

5 Here’s what else to consider

Cost Engineering

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