I’m excited to share some insights from a recent podcast discussion I had with Prateek Singh, Ben Rodilitz, and Colleen Johnson on a topic that’s near and dear to every project manager’s heart: Earned Value Management (EVM) and probability.
What the Heck is EVM?
In our conversation, we explored the world of EVM, its evolution, and how it can be part of a powerful toolset for managing risk in today’s fast-paced project environments. (Hint: It probably can’t make the trip solo.)
EVM has been around for quite a while, originating in the 1960s, but the big question today is whether it’s still relevant in our agile, dynamic project landscapes. In 2018, a panel recommended eliminating EVM for software projects using agile methods, stating that it’s not well-suited for such environments. However, the reality is that many organizations, including government agencies and aerospace giants, continue to use it, and it’s a requirement for GSA projects valued at $20 million or more.
EVM – Meet Agile Probabilistic Forecasting
So, where does EVM fit in the world of agile and fast-paced projects? Our conversation delves into some fascinating ideas. For one, EVM can be reframed as a risk management tool. Rather than treating it as a strict measurement of progress, we can use it to assess and manage risk from both the purchaser’s and provider’s perspectives.
One key shift in thinking is focusing on outcomes over outputs. Instead of rigidly tracking progress towards predefined goals, the discussion encourages breaking work down into smaller, more manageable pieces. This approach allows for flexibility, early value delivery, and ongoing learning. It’s about making small bets, seeing what works, and adapting to changing circumstances.
Another important aspect highlighted in our conversation: probabilistic forecasting.
While multiple publications give guidance on combining Agile and EVM (eg., NDIA: An Industry Practice Guide for Integrating Agile and Earned Value Management on Programs and PMBOK: Earned Value Management (EVM) Guide), they rely on Story Point estimate and velocity.
Argh. Deterministic forecasting. The Flaw of Averages.
When you combine EVM with probabilistic forecasting, it can be a game-changer. Relying on historical data, you get forward-looking forecasts with probability. “It looks like we have an 85% likelihood of completing 3 features in the next 90 days” – voila a risk management tool.
It’s A Date
In the end, our podcast conversation makes a compelling case for viewing EVM combined with Agile principles through the lens of risk management leveraging probabilistic forecasting. By doing so, you can use it to ensure that your most critical work gets done, minimize resource wastage, and have more meaningful discussions about value and progress in today’s ever-evolving project landscape.
So, whether you’re a project manager or someone interested in optimizing project management practices, I hope this podcast provides valuable insights into the world of Agile, EVM and their role in managing risk effectively.