Innovel, LLC

Earned Value Measurement - the useless metric for Agile

Earned Value Measurement, for those unfamiliar, is a misnamed metric that is common in more sophisticated waterfall or phased project management. It actually has nothing to do with anything earned. EVM is a measure of how close you are to some pre-defined schedule and pre-defined budget. In essence it is a tracking metric, that when you are 100% on schedule and on budget, you “meet” the standard. Any deviation and you drop below the standard.

In Agile, we start from the assumption that we cannot predict the future. While we know generally how much time scope and budget we have, we know that it is waste to spend large amounts of time and resources building predictive plans. We always flex on scope, and we inspect and adapt to the learning of the team, customer, and business environment. Agile methods can adapt because of the delivery of working product into production, early, often, and throughout the project. This has many virtues - it allows real customer feedback, it validates or invalidates business/investment decisions, it shows strengths and weaknesses of approach, and it provides real learning opportunities for the team, customer and business. Waterfall methods steer like a dragster, and EVM was a tool to tell you how far you had deviated from the initial direction you pointed the vehicle. Agile methods are like driving a car, you look out the window and adjust your course accordingly. If you were to drive from NY to Florida, would you plan every turn before you leave, and how long you would take? Would a tool like EVM, knowing how “off” you were from your initial plan be useful to your trip? Wait! We can’t stop for coffee, our trip EVM meter will show we are deviating from our plan!

Agile methods deliver product to the business and a return on investment early, often, and throughout the project. This means that it is now possible to measure ACTUAL market acceptance and ACTUAL ROI. We are not building bridges or roads where the capital cost outlay is amortized over 20 years. Using EVM does not add value to the project, and does not increase understanding or visibility. Agile and Lean methods emphasize regular demonstrations of actual progress, and regular releases into production. This is what managers need to look at. EVM is built on estimates that are wildly inaccurate because of the uncertainty built into any complex endeavor where the customer doesn’t know what they want until they go on a learning journey with the team, and the business context is continually changing. I urge everyone in the traditional EVM community to just drop EVM, and focus on how you can help customer measure actual, real business value with every release. This is where new ideas for measuring rapid market feedback, capabilities delivered, and how these can drive learning in the organization. I would also ask that EVM practitioners learn something new, and stop trying to shoehorn irrelevant yet burdensome ideas into a completely new way of working.

For more detailed thoughts on what to measure in Agile, I would invite you to read a paper published by Deborah Hartmann and myself at Agile 2006 on Agile Metrics and Diagnostics, you can find it in our Articles section.