agile > chapter 3 iterative and incremental execution and delivery > 13 agile earned value

Agile Earned Value

In agile, we can use the velocity of a project and the economic value of each story point in order to calculate the earned value. We can calculate the economic value of each story point by dividing the project budget by the total number of story points.

Once we have the current number of completed story points, we can multiple it by this economic value per story point.

We can even calculate the value expected to be gained at the end of each iteration. We can use a burndown diagram in order to indicate to stakeholders the current and projected progress of the project.

If each expect to cover 40 story points in 4 weeks and at the end of this period we have only covered 30 then we are 75% of where we expected to be. The project will thus need about another week in order to reach the 40 points (assuming we complete 10 points each week).

Monitoring reports in an agile manner

We do not use tracking reports in agile projects. We instead use an information radiator like the burndown diagram in order to easily see the progress. When the real line is above the ideal line then the project is behind. If this real line is below the ideal line then the project is ahead of where it is expected to be currently.

The distance between the ideal and the real values tells us how much ahead or behind we are. This ease of determining the progress of the project ties into Lean philosophy - it is less wasteful to use a simple graph instead of 10 pages of reports.