Earned value management (EVM) combines the measurement of scope, schedule, and cost in a single technique. EVM helps bridge the gap between agile project management and management metrics, by defining variances that provides accurate project status for scope (corresponding to the value of what has/will be delivered), cost (both budgeted and actual), and schedule.

The variances measure how the project is doing relatively to these three dimensions of progress. A single variance will leave part of the truth out of the picture; therefore we have to look at multiple variances to get an accurate status.

Let me give you an example: a project is made of three tasks of identical value and cost. At a specific point in time, the schedule tells us that tasks 1 and 2 should have been completed. But only task 1 has been completed, therefore the project is behind schedule. However, the actual cost of work performed (i.e. for task 1 only) is lower than the budgeted cost of task 1, therefore the project is under-budget. Consequently, the project is late but cost less than expected to deliver this value. One typical explanation of such a situation would be that part of the team has been allocated to another project after initial planning, but that the remaining members of the team worked more efficiently than planned (probably because of the pressure of the project being late).

Anyone involved in projects can understand why EVM is useful, but what does it have to do with agile?

Remember that one of the founding principles of agile is that progress is measured in delivered value. EVM, as the name implies, also focuses on delivered value. But measuring value the agile way is overly simplistic and can lead to misinterpretation of the status. In Scrum for example, the burndown chart pictures delivered value over the project and during the current iteration. If you already used this technique you certainly felt that something is missing. Indeed, by moving items in and out of the product backlog in the middle of iterations we loose the ability to evaluate how the project is doing according to schedule. Similarly, the burndown chart assumes that an hour of work accurately reflects all costs, failing to reflect that different team members incur different costs, as well as other costs. Therefore the information we have prevents us from using the variances defined by EVM.

Agile methods fit perfectly with EVM in principles but fail to provide techniques to measure variances. This is one of the reasons that agile has so much trouble gaining acceptance among managers and remains confined in small-to-medium development teams (in most organizations). The vast majority of agile "project managers" (excuse the quotes) do not know how to communicate to manager types how the project is doing according to schedule and budget (or maybe there is no schedule or budget because, you know, we're agile now).

Some hard-core agile advocates might perceive EVM has an "old school" technique that would make agile less agile, but I frankly do not see how you could measure progress without adding some metrics to agile-as-it-is-now. EVM has the advantage of being simple enough to add very little project management overhead, while providing true management-level metrics.

Other practitioners share this opinions:

• Dan Rawsthorne, Calculating Earned Business Value For An Agile Project (2007), Agile Journal
• T. Sulaiman, B. Barton, T. Blackburn, AgileEVM - Earned Value Management in Scrum Projects, SolutionsIQ
• A. Cabri, M. Griffiths, Earned Value and Agile Reporting, Quadrus Development Inc.