EARNED VALUE MANAGEMENT

FOR SOFTWARE PROJECT TRACKING

By: Nick Klauer

OVERVIEW

Discuss What EVM is Explain why you would Use EVM Identify who uses EVM How to implement EVM into your project Criticisms of EVM

WHAT IS EVM?

A metric to compare cost of production vs. value of product over time

Used during a project’s lifespan Enables a project manager a way to gauge if

a project is ahead of schedule, falling behind, under- or over- budget

WHAT IS EVM?

Common problems in large software projects:

Integration Scheduling Problems Budgeting

WHY USE EVM?

Provides a way to gauge ongoing progress of a project

Better analysis of costs to produce a system Schedule Analysis

WHY USE EVM?

Then (1994) Now (2004)

Type 1: Success (on time, under budget)

Type 2: Challenged (over budget, over schedule, but complete)

Type 3: Failure (Scrapped)

WHO USES EVM?

Many Governmental Organizations: DoD NASA DoE ANSI/EIA Standard 748-A OMB Circular A-11 Part 7

Project Management Institute(PMI) Standards CMMI – Level 5 Integration Sarbanes-Oxley Act of 2002 Compliance

EV

M C

OM

PA

RIS

ON

– NO

EV

M M

ETR

IC

AP

PLIE

D

• No measure for how much work has been done

• Can’t identify value of project, just it’s ongoing cost

• Can be misleading (this is not under-budget)

Courtesy: Wikimedia Foundation, Inc. and Garry L. Booker

EV

M C

OM

PA

RIS

ON

– BA

SIC

EV

M A

GA

INS

T

PV • Can identify

schedule variances

• It can be inferred from week 6 and later that we’re behind schedule

• It is shown that we are ahead of schedule early in project.

Courtesy: Wikimedia Foundation, Inc. and Garry L. Booker

EV

M C

OM

PA

RIS

ON

– EV

M A

GA

INS

T C

OS

T

• Measuring EV against cost

• Can be seen we are under budget

• We are creating more value than we are expending

Courtesy: Wikimedia Foundation, Inc. and Garry L. Booker

EV

M C

OM

PA

RIS

ON

– EV

M A

GA

INS

T B

OTH

AC

A

ND

PV

• All three metrics included

• Can be compared overall value against time

• Can compare against cost as well

• Much more can be understood on a project’s progress

Courtesy: Wikimedia Foundation, Inc. and Garry L. Booker

HOW TO IMPLEMENT EVM

Many various implementations Standards define different methods Three general implementations:

Simple Intermediate Advanced

IMPLEMENTING EVM - SIMPLE

One emphasis: Technical Performance Weighted values for each components

Value can be arbitrary numbers, or dollar amounts ($$$)

Earning Rules: 0/100 – All or Nothing. 50/50 – Half value at start, half when completed 25/75 – Creates an emphasis for completing a

piece over just starting it

IMPLEMENTING EVM - INTERMEDIATE

Adds on to Simple Schedule Performance Values weighted in relation to schedule

Gives more credit to being on schedule over being late

Earning Rules: Adds milestones and weighting of schedules Additional models on Effort Analysis and Level of

Effort(LOE) Slow weeks have less of an impact Splitting time between components

IMPLEMENTING EVM - ADVANCED

Takes intermediate, adds Cost Performance Requires metrics to be measured in actual

dollar amounts rather than point systems ANSI/EIA 748-A Standard requires Advanced

EVM to be implemented

CRITICISMS OF EVM

Can be too lightweight, offering little data Costly in small projects Doesn’t measure quality of product Agile Development not considered a good

candidate Cost Estimation is difficult, no matter what

metric to measure against Estimation falls on Project Manager, Architects

SOURCES Delivering Earned Value Management for Government

Agencies Using the Microsoft Office System - http://www.microsoft.com/office/showcase/earnedvalue/demo.mspx

Wikipedia: Earned Value Management - http://en.wikipedia.org/wiki/Earned_value_management

Software Engineering Institute: Using Capability Maturity Model Integration (CMMI) to Improve Earned Value Management - http://www.sei.cmu.edu/publications/documents/02.reports/02tn016.html

Standish CHAOS Report, 1994 and 2004 - http://www.standishgroup.com/sample_research/chaos_1994_1.php

Statistics over IT Failure Rate - http://www.it-cortex.com/Stat_Failure_Rate.htm#The%20Robbins-Gioia%20Survey%20(2001)

Earned Value Management Tutorial – NASA - http://evm.nasa.gov/definition1a.html

Project Management Institute – http://www.pmi.org/