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Tuesday, September 30, 2008
Managing Scrum Projects with Agile EVM and Earned Business Value (EBV) Metrics
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Scrum is a popular project management framework for agile projects. Scrum projects are typically managed quite informally, with the only metrics used being various velocity metrics and burn-down charts. Because these metrics only measure the speed of delivery, not the project's cost or the business value it generates, many project managers are resistant to Scrum. One of the major differences between traditional and agile projects is that traditional projects focus on delivering software that satisfies requirements, while agile projects focus on maximizing ROI through continuous feedback and re-planning. That is, the focus of agile projects is on business value rather than conformance to requirements, and so Earned Business Value (EBV) metrics can be crucial.
Of course, it is also important to know how efficient and effective the team is in doing the work that provides Business Value, so Earned Value Management (EVM) metrics are also applicable. In fact, EVM metrics are easier to calculate and understand in agile environments than in traditional ones. In this paper, we describe how to use three management metrics - Cost Performance Index (CPI), Schedule Performance Index (SPI), and Earned Business Value (EBV) - to provide information to help manage an agile project. We also demonstrate (through a simulation) that (even) large changes in the SPI and CPI metrics don't necessarily mean a significant change in EBV.
Dan Rawsthorne, Ph. D., CST
Dan Rawsthorne, Ph.D. is a Certified Scrum Trainer and one of Danube Technologies' transformation coaches, helping organizations transition to Agile practices. Rawsthorne is a 27-year veteran of the software industry, having worked in a wide range of capacities, from coder to project manager, for companies large and small.
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