Making agile development work in a government contracting environment-measuring velocity with earned value

Before any of the current "agile" development methods, earned value management provided information for planning and controlling complex projects by measuring how much "value" was produced for a given cost in a period of time. One shortcoming of an agile development method is its inability to forecast the future cost and schedule of the project beyond the use of "yesterdays weather" metrics. These agile methods assume the delivered value, "velocity" in the case of XP, is compared with the estimated value-this is a simple comparison between budget and actual cost resulting in a cost variance. No schedule variance process is directly available in XP. Earned value analysis provides a means of predicting future schedule and cost variances through three measurements-budgeted cost for work scheduled, actual cost for work performed, and budgeted cost for work performed (earned value). We describe the use of earned value in conjunction with agile development on a mission-critical, high-security, government project.