It’s not earned; it’s accrued. It’s not value, it’s cost. Big difference.
There are many proponents of the concept of “earned value” for software projects. Many of them are consulting companies and those that work on US government projects. I think earned value management (EVM) is bunk. The concept has merit but the implementation is fatally flawed.
EVM is a way to measure software project progress by comparing the amount of money spent to date to the amount projected and to the work completed. If you are spending less money than planned for the work being delivered, you are under budget. If you spend more money than planned for the work output, you are over budget.
You could be ahead of or behind the scheduled time. EVM’s focus is budget not time or quality so you’ll need to determine schedule and quality status using other metrics.
You can see why the EVM concept appeals to consulting firms. They want credit for the work completed, that is, value delivered, so they can send invoices and receive payments. EVM works great for them. What about the rest of us?
“Value” and “Cost” are not the same thing.
Problems begin with the term “value”. Many software applications have little or no value until they are largely complete. At times, they have no value even then due to changes in the marketplace or the underlying technology.
Whether real value is created or not, costs are accrued. The project cost keeps going up regardless of the value of the deliverables. Measuring cost is comparatively simple. Measuring value is guesswork.
Another problem is the degree of done or the level of completeness. Software components are designed, written, tested, integrated, verified, validated and accepted. How much value is accrued at each stage? Truth is, there is no repeatable way to know. If you wait until the ‘accepted’ stage, the earned value curve will have a classic hockey stick shape. That’s useless.
Projects accrue value above or below the accrued costs. Individual components of the software accrue value in various ways. Some components accrue high initial value while others accrue value more slowly over time, if at all.
Software value is not the same as cost. Tracking projects costs is a good idea. Estimating earned value is a complex and flawed means of measuring project progress. Don’t rely on it. Have you used EVM?