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Earned Value Management

Lead Time V/s Cycle Time

Lead time clock starts when the request is made and ends at delivery. Cycle time clock starts when work begins on the request and ends when the item is ready for delivery. Cycle time is a more mechanical measure of process capability. Lead time is what the customer sees.


The time a Story enters the Deployed stage minus the time the story entered the Backlog stage. Story 34 has entered the Backlog in day 4, and enters the Deployed stage on day 11; lead time equals 7 days (day 11- day 4).


The time between two stories entering the last stage--Deployed stage in this case. Story 34 enters the Deployed stage on day 11, then two days after, the next story-- 37--enters the Deployed stage; cycle time equals 2 days (day 13 – day 11) With these definitions in place it is obvious that the lead time is what is relevant from the business perspective. The cycle time is what the team can influence by itself by changing its work process. To reduce lead times one can (and should) reduce cycle time. But often the time before the work starts is really long so this wait time should be reduced also.

Earned Value Management

Earn Value Management (EVM) technique used to track the Progress and Status of a Project & Forecast the likely future performance of the Project. Integrates the scope, schedule and cost of a project. Answers a lot of questions to the stakeholders in a project related to the performance of the project. It has the ability to combine measurements of:

  • Scope Schedule and Cost

  • Concepts of EVM

The earned value concept improves upon the standard comparison of budget vs. actual cost which lacks an adequate indicator of progress. Earned value is a value assigned to work which was accomplished during a particular time period. This value can be stated in any appropriate measurable unit such as hours or dollars.

Earned value thus provides progress information that can be compared to the planned budget and actual cost to provide additional insight into project status.

Basic concepts of EVM are:

All project steps “earn” value as work is

The Earned Value (EV) can then be compared to actual costs and planned costs to

Determine project performance and predict future performance trends

Physical progress is measured in dollars, so schedule performance and cost performance can be analyzed in the same terms

Few basic terms used in EVM

Planned Value

The value of the work planned to be accomplished based on the budget (in dollars or hours)

EV (Earned Value)

The integrated value of work actually accomplished based on the budget (in dollars or hours)


Essential features of any EVM implementation include a project plan that identifies work to be accomplished a valuation of planned work, called Planned Value (PV) or Budgeted Cost of Work Scheduled (BCWS), and Pre-defined “earning rules” (also called metrics) to quantify the accomplishment of work, called Earned Value (EV) or Budgeted

BAC (Budget at Completion)

The budget assigned to complete the work This metric indicates how many cents have been "earned" out of every dollar spent. It measures cost efficiencies


Ac (Actual cost) = Total cost taken to complete the work as of a reporting date

Budgeted Cost of Work Performed (BCWP).

Earned Value (EV) or BCWP is the total cost of the work completed/performed as of a reporting date.


Assume a project that has exactly one task. The task was base lined at 8 hours, but 11 hours have been spent and the estimate to complete is 1 additional hour. The task would have been completed already. Assume an Hourly Rate of $100 per hour

Since, PV is Hourly Rate * Planned Hours hence it is = $800 ($100 * 8 hours)

AC is Hourly Rate * Total Hours Spent hence it is = $1100 ($100 * 11 hours)

% age complete is AC/Total Cost = ($1100 AC / $1200 EAC) = 91.7%

Now EV is Base lined Cost * % Complete Actual hence it is = $734 (baseline of $800 * 91.7% complete)

CPI is EV/AC so it is 0.66 ($734 EV / $1100 AC) CPI indicates that project is over budget.

Which means against every 1$ spent only 66cents are being recovered.

Escaped Defects

An escape is a defect that was not found by, or one that escaped from, the test team. Implementing the escape analysis method for test improvement can increase the quality of software by lessening the occurrence of software defects .

Escaped defects should then be treated as ranked backlog work items, along with other project work items. They should be prioritized high enough to resolve them within the next sprint or two and not accumulate a growing backlog. A growing defect backlog is indicator that the team is operating as a “mini-waterfall” project, rather than an agile project, requiring more collaboration between Development and Quality Engineers and early testing. To be able to calculate that metric, it is important that in your defect tracking system you track: Affected version, version of software in which this defect was found. Release date, date when version was released

The calculation process:

Find all versions that were already released For each version, find all defects that affected the version. If defect creation date is after version release date then this defect is an escaped defect. Now count all those escaped defects.

Best Practices

Metric helps in tracking that sends correct message to development team:

  1. Functionality that is released, should be of good quality

  2. Less Escaped Defects almost always means good job of QA team

Best Practices that one should follow while analysis are:

  • Measure outcomes, not outputs

  • Measure results, not activity

  • Measure work items done, not time spent per task

  • Provides fuel for meaningful conversation May measure Value (Product) or Process

  • Encourages "good-enough" quality