variance

When looking at the success rates of software development projects many are surprised to learn that the success rate is around 39% ,  18% fail and a whopping 43% are challenged according to the  “Chaos Manifesto 2013″ report published by The Standish Group.

Even though each project has its own unique set of reasons for failure, majority of the failures are related to three areas:

  • Poor budgeting
  • Lack of communication and transparency
  • Resistance to change

So how do we address these three areas that seem to contribute to the project failure?

To better manage projects at BDC we utilize  Earned Value Management to determine whether cost and schedule performance are proceeding as planned. The most common question we get from clients is “Are we on track in terms of cost and schedule”. At BDC we break down this question into two aspects:
1. How are we doing in terms of budget?
2. Will we be able to finish on time?

Why do we use EVM at BDC?
• EVM tracks the progress and status of a project and helps forecast future performance of the project.
• EVM takes into account the scope, schedule and cost of a project.
• EVM answers project performance questions for the stakeholders.
• EVM tracks past and current performance and can help predict the future performance using statistical       techniques.
• EVM alleviates a lot of the issues related to schedule and cost overruns.

What’s needed to determine earned value ?
Three data points are needed to establish the initial baseline:
• The number of planned iterations in a release;
• The total number of planned story points in a release;
• The planned budget for the release.
In order to calculate the EVM metrics, there are four measurements needed:
• The total number of story points completed.
• The number of Iterations completed.
• The total Actual Cost.
• The total story points added to or removed from the release plan.

See EVM in action!
EVM is more focused on cost and schedule of the project. The EVM chart can tell us the cost and budget overruns which the sprint burn down charts cannot.
Below is an example of an EVM chart. The blue and red lines are the deviation indicators giving a true picture how far off we are in terms of time and cost.

 

evmchart

 

 

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