earned value management system

This article provides an introduction to the differences between an Earned Value Management System (EVMS) and Agile approaches on projects, and isolates the challenges of implementing an EVMS on a project where the project management has chosen to follow an Agile approach to the development work. The article explores the principles of EVMS and of Agile, and contrasts them to show where there are inherent conflicts. The article then discusses how the conflicts can be mitigated so that the benefits of both the EVMS and Agile can be obtained from a joint implementation.

Earned Value Management (EVM) Background

Earned Value Management is a 50 +/- year old methodology based on widely accepted principles that applies documented, systematized practices to support the processes of organizing, planning, directing, and controlling large complex projects, of any nature, which contain a high degree of uncertainty.

An EVMS is structured compliant to 32 guidelines that define what a project management information system should be capable of doing to support the program management team. Within the 32 guidelines there is a subset of generally recognized core principles. The core principles are:

1. Organize the entire scope of the project using a Work Breakdown Structure (WBS).
2. Organize the project team using an Organization Breakdown Structure (OBS).
3. Integrate the project work with the project team to create management control points (Control Accounts).
4. Schedule the project work in the Control Accounts across the entire project duration at the appropriate level of detail.
5. Establish time-phased budgets for the scheduled work in the Control Accounts.
6. Establish the scope/schedule/budget baseline as the Performance Measurement Baseline (PMB).
7. Authorize the scope/schedule/budget and control the start/stop of work.
8. Periodically measure the schedule and the value of completed work and determine the Earned Value.
9. Record direct costs (actual costs) and summarize into the Control Accounts.
10. Compare planned, accomplished, and spent to analyze the performance and associated variances.
11. Develop realistic time and cost estimates for the remaining effort in the Control Accounts.
12. Rigorously control changes to the Performance Measurement Baseline.

The EVM concept presented in these guidelines is a sound management approach, that once incorporated on any type of program, whether research and development, construction, production, etc. provides all levels of management with early visibility into cost and schedule problems.  Earned Value Management now appears as a contractual requirement on programs world-wide.  Primary EVM users include the United States, Europe, England, Canada, Australia, China, and Japan. It is a requirement of many U.S. Government agencies, including the Department of Defense (DoD), the National Aeronautics and Space Administration (NASA), the Department of Energy (DOE), the Intelligence Community, the Department of Homeland Security (DHS), the Federal Aviation Administration (FAA), the Department of Transportation (DOT), Health and Human Services (HHS), and others.

EVMS has been adopted by companies in situations where it is not a contractual requirement so that they can gain the discipline and benefits of the structural management approach discussed in the guidelines.

Agile Background

Agile is a 20 +/- year old approach to applying a mindset that values the use of small, empowered, self-organizing, multi-functional teams, mainly in software development, to establish a test driven product development effort. This uses a series of short, rapid incremental builds within projects with a high degree of uncertainty to achieve shorter development times, lower costs, and products more closely aligned with customer requirements.

Agile does not usually appear as a contractual requirement. The concept is adopted by companies and organizations with the belief that a better product will be produced faster, and with less expense, using this approach than if traditional approaches were followed.

There are a core set of principles for Agile that were initially established in the copyrighted Agile Manifesto. These delineated core principles are:

1. Early and continuous product delivery.
2. Deliver working software (product) frequently.
3. Expect change and respond positively to change.
4. Developers and project business organization (PMO) work together.
5. Product-focused build teams are at the core.
6. Support self-organizing teams – trust among peers.
7. Encourage face-to-face discussions (involve the user/customer).
8. Working software is the measure of progress.
9. Maintain a constant sustainable pace of development.
10. Simplify the process and the product.
11. Put the highest value on technical excellence.
12. Improve team effectivity.

So How Does Agile Work?

The Agile mindset or approach is implemented through a process of defining the product backlog into smaller and smaller subsets of work that are structured in a top down fashion. At the lowest level of product backlog, the work elements or requirements can be prioritized and assigned to teams. The self-organizing teams pull work from the backlog and work the tasks to completion in a series of short, time-fixed Sprints or iterations. Sprints are often from 2 to 4 weeks long.

Because the teams are self-organizing, there is no team manager or team lead. The teams work as a group and only pull from the backlog at the last possible minute, and do minimal planning for each Sprint. If the product backlog is properly deconstructed and defined into user stories, then the planning meeting for an entire 4 week Sprint can be accomplished in a few hours.

The teams design, code, test, integrate, and deliver functionality in every Sprint. Since tested product is output every few weeks, all on the project can see the product being created and can contribute along the timeline, as needed, to provide a complete finished product.

The product owner embodies the customer’s perspective and either accepts or rejects the team’s work.  At the latter point of each Sprint, the tested product is demonstrated to the product owner.

High Level Side-by-Side

The two approaches are contrasted in the chart shown below. The EVMS is a methodology that is highly documented and highly systematized, while Agile is just the opposite. It is more of a mindset than a methodology with the preference not to have significant process documentation.

The EVMS is applied to entire projects and contracts, while generally Agile is applied to software portions of projects.  However, it could also be used on other development work.

The EVMS is usually a contractual requirement with significant implementation and operation constraints while Agile has none of these. As a contractual requirement, the EVMS carries with it the option for customer reviews and the threat of non-compliance, which entails penalties.

Lower Level Side-by-Side

In addition to the high level side-by-side, there are significant differences within the details of the two approaches. These are shown in the side-by-side table below.

Accommodate and Capitalize on Differences

It is possible to implement Agile along with an EVMS if the EVMS application is set up to accommodate the differences and capitalize on them.

For example, the main reason that Agile’s embrace of change is a potential problem within an EVMS is because often the EVMS is used to plan too far in advance, and then reacting to change is difficult and expensive. If short term planning in the EVMS can be coordinated with the Agile planning, then the two can coexist.

The Agile free acceptance of scope changes within the backlog runs counter to the EVMS imposition of baseline change control. But if the EVMS baseline can be carefully set at a work level above the busy lowest level ups and downs, the impact to baseline change control is manageable.

A surprising chance to capitalize on Agile, within the EVMS, is found in the Scrum team approach in Agile where the team breaks work down into tasks far below what would normally be done in an EVMS, and then meets daily to update progress and provide corrective action. This low level constant attention means that the EVMS benefits from a better look at real progress as assessed by the real performers.

Not all the compromise needs be on the EVMS side of the equation. The Scrum team operations will often be defined to have the least possible recording of what happens during the Sprint. Since the product is king, then only the product really matters. But that misses the opportunities to capture the actions of the team for analysis, and use in upgrading their skills later. Necessary compromises would include some additional recording of the daily actions of the team and capturing the progress and problems. These would then be used in the EVMS functions of performance measurement, variance analysis, and corrective action planning.

One other compromise in the Agile realm that would be needed is the adoption of some minimum documentation of processes so that team operations can be repeatable and stable. Even a self-organizing team cannot change the way they work every time it wishes. That would raise the risk of a chaotic work environment.

These topics are recapped in the table below.

Bottom Line

Implementing an EVMS is a challenge itself. Implementing Agile is a challenge too; perhaps a more difficult challenge. Implementing the two approaches side-by-side can seem impossible. But it is possible and even beneficial if done in a way the makes needed accommodations in both arenas for the project’s benefit.