This presentation is from a presentation on November 19, 2010. The agenda is: 1. Describe Project Portfolio Management 2. Why Agile challenges business 3. Compare Earned Value Management (EVM) 4. Introduce AgileEVM 5. Show how AgileEVM translates Points to Dollars 6. Analyze a Portfolio

1. Translating Point to
Dollars
Portfolio Management with AgileEVM
Brent Barton

2. Brent Barton - AgileEVM Inc.
President, AgileEVM Inc.
More than 15 years software development in many roles as
both employee and consultant for organizations from small
start ups to multinational corporations
Former CTO, Development Manager, PMO Manager, Agile
Coach, Mentor, Certified Scrum Trainer, ScrumMaster, Product
Owner
Actively involved in Agile Rollouts from small Product
companies to very large IT organizations
www.AgileEVM.com
Scrum Articles
Email: brent@agileevm.com
“AgileEVM – Earned Value Management in Scrum Projects”, IEEE Web: http://www.agileevm.com
2006 Blog: http://www.gettingagile.com
Follow me on Twitter: @brentbarton @agileevm
“Manage Project Portfolios More Effectively by Including Software
Debt in the Decision Process”, Cutter Journal 2010
“Implementing a Professional Services Organization Using Type C
Scrum”, IEEE
“Establishing and Maintaining Top to Bottom Transparency Using
the Meta-Scrum”, AgileJournal
“All-Out Organizational Scrum as an Innovation Value Chain”, IEEE

3. In the next hour...
• Describe Project Portfolio Management
• Why Agile challenges business
• Compare Earned Value Management (EVM)
• Introduce AgileEVM
• Show how AgileEVM translates
Points to Dollars
• Analyze a Portfolio
• Q&A

4. Project Portfolio
Management

5. Project Portfolio
Defined
A portfolio is a collection of projects or
programs and other work that are grouped
together to facilitate effective management of
that work to meet strategic business objectives.
source: PMI The Standard for Portfolio Management
— Second Edition

6. Project Portfolio
Management
Business
Value
• We want to measure
outcomes, not outputs Time
• YES: Business Value
• Less Important: Completed Projects

7. Effective Project
Portfolio Management
• Prioritization to maximize
Business Value
• Effective delivery to minimize costs
• Re-allocation of resources when costs are
too high or the benefit is too low
source: Cutter Journal

8. Agile...
from a business point
of view

9. Strengths of Agile
• Assertion of quality by self-organizing
teams
• Adaptive Planning

10. Weaknesses of Agile
• Cost management is (mostly) missing
• Uses abstract measures
• Relative points
• “Ideal” days
• Velocity
These create
business challenges

11. Earl, you can’t compare velocity of
one team with another! Estimates
are relative and team specific...
Can’t I just know when we can Time to go...
Uh oh,
release and how much it will cost?
It depends...
Agile is a pain
in the @$$!
Maybe it’s Geoff...

12. Agile partially supports
Portfolio Management
• Prioritize to maximize ✓ Agile
Business Value
• Effectively deliver to ✓ Agile
minimize costs
• Re-allocate resources
when costs are too high or
the benefit is too low

13. Earned Value
Management (EVM)

14. Earned Value
Over EAC
Total Allocated Budget Budget Estimate at Complete
Management Reserve
PMB
Project Management Baseline
Projected Slippage
$
Planned Value
Actual Cost
(PV)
(AC) (EV)
Earned Value
Time
Time Completion
Now Date

15. EVM Performance
Indicators
Cost Performance Index (CPI=EV/AC)
CPI < 1 CPI = 1 CPI > 1
Under Budget On Budget Over Budget
Schedule Performance Index (SPI=EV/PV)
SPI < 1 SPI = 1 SPI > 1
Ahead of Schedule On Schedule Behind Schedule

16. Strengths of EVM
• Integrates cost and schedule management
• Forecasts in financial units based on units
used for actual cost
• Decades of use
• Part of PMBOK (ANSI/PMI 99-001-2008)
• Part of EVMS (ANSI/EIA-748-B-2007)
• Mathematical Rigor

17. Weaknesses of
Traditional EVM
• Expects everything
fully defined up front Ugh!
• No assertion of quality
• Claiming value is earned
on intermediate
work products
• Poor results on software
projects using waterfall

18. Agile Addresses EVM’s
Root Cause Issues
• Self directed work teams are in a position
to ensure and assert level of quality
• Do not claim value earned based on
intermediate work products

19. Agile + EVM
• Prioritize to maximize ✓ Agile
Business Value
• Effectively deliver to ✓ Agile
minimize costs
• Re-allocate resources
when costs are too high or ✓EVM
the benefit is too low
• We want to measure + ✓ Agile
outcomes, not outputs ✓EVM

21. AgileEVM Background
• Rigorously established foundation *
• Key Assumption: The ratio of
(story points accepted)
(total story points in a release)
is a good measure of Actual Percent Complete
* http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=1667558

22. Incorporates ANSI
standard equations
• PV = PPC * BAC
• EV = APC * BAC
• CV = EV - AC
• SV = EV - PV
• CPI= EV/AC
• SPI = EV/PV
• ETC = 1/CPI * (BAC – EV)
• EAC = AC + ETC source: PMI: The Practice Standard for
Earned Value Management

23. Translating
Points to Dollars
• Agile often uses relative measures for
estimating
• Story Points
• Ideal Time (not to be confused with actual
time)
• Velocity is used to forecast schedule
* http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=1667558

24. Translating
Points to Dollars
AgileEVM roots proved mathematically that forecasts
based on average velocity is identically equal to the EVM
forecast standard Estimate At Complete (EAC)
• Forecasts based on average velocity
• abstract units like points or ideal days
• Forecasts based on Estimate At Complete (EAC)
• financial units (dollars) *
* http://ieeexplore.ieee.org/xpl/freeabs_all.jsp?arnumber=1667558

25. AgileEVM extends this
rigor into the Portfolio
• Fundamental unit is the Release
• Value milestones and production releases
• Units of money rolls up, points and velocity
don’t
• Forecasts provide ranges based on various
indicators

26. Demo

30. Q&A