agile > chapter 3 iterative and incremental execution and delivery > 11 earned value method

Earned Value Method

This method helps us to indicate to others the progress of a project. We integrate the scope, time and costs to give a metric which tells stakeholders the value that has been generated by the project so far.

We determine the budgeted cost of the performed work and compare this value to the actual cost of the work. The terms involved in the calculation are:

The project is on schedule if the SPI is 1 and is advancing further than expected if the SPI is greater than 1. The project is operating within the budget if the CPI is 1 and is very cost-effective if the CPI is greater than 1.

The Estimate at Completion (EAC) is found by dividing the original budget by the CPI: $$\text{EAC}=\frac{\text{BAC}}{\text{CPI}}$$

Earned value report

The earned value report tells us:

What to consider

A project can be on track in terms of cost but not in terms of schedule and vice versa. Some projects might require us to either speed up the work or save on the costs. Sometimes it is feasible to expend more resources in order to increase the rate of work completion e.g. by hiring a contract worker to ease the work load when the team members of that specific expertise are currently overwhelmed with work.