Air Force Institute of Technology AFIT Scholar Theses and Dissertations Student Graduate Works 3-24-2016 Earned Value Reporting on Agile Software Development Programs within the Department of Defense Elizabeth G. Hodson Follow this and additional works at: https://scholar.afit.edu/etd Part of the Finance and Financial Management Commons Recommended Citation Hodson, Elizabeth G., "Earned Value Reporting on Agile Software Development Programs within the Department of Defense" (2016). Theses and Dissertations. 397. https://scholar.afit.edu/etd/397 This Thesis is brought to you for free and open access by the Student Graduate Works at AFIT Scholar. It has been accepted for inclusion in Theses and Dissertations by an authorized administrator of AFIT Scholar. For more information, please contact [email protected]. EARNED VALUE REPORTING ON AGILE SOFTWARE DEVELOPMENT PROGRAMS WITHIN THE DEPARTMENT OF DEFENSE THESIS Elizabeth Hodson, Civilian, USAF AFIT-ENV-MS-16-M-158 DEPARTMENT OF THE AIR FORCE AIR UNIVERSITY AIR FORCE INSTITUTE OF TECHNOLOGY Wright-Patterson Air Force Base, Ohio DISTRIBUTION STATEMENT A. APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED. The views expressed in this thesis are those of the author and do not reflect the official policy or position of the United States Air Force, Department of Defense, or the United States Government. This material is declared a work of the U.S. Government and is not subject to copyright protection in the United States. AFIT-ENV-MS-16-M-158 EARNED VALUE REPORTING ON AGILE SOFTWARE DEVELOPMENT PROGRAMS WITHIN THE DEPARTMENT OF DEFENSE THESIS Presented to the Faculty Department of Cost Analysis Graduate School of Engineering and Management Air Force Institute of Technology Air University Air Education and Training Command In Partial Fulfillment of the Requirements for the Degree of Master of Science in Cost Analysis Elizabeth Hodson Civilian, USAF March 2016 DISTRIBUTION STATEMENT A. APPROVED FOR PUBLIC RELEASE; DISTRIBUTION UNLIMITED. AFIT-ENV-MS-16-M-158 EARNED VALUE REPORTING ON AGILE SOFTWARE DEVELOPMENT PROGRAMS WITHIN THE DEPARTMENT OF DEFENSE Elizabeth Hodson Civilian, USAF Committee Membership: R. David Fass, PhD, Lt Col, USAF (Ret.) Chair Brandon Lucas, Lt Col, USAF, PhD Member Dr. Edward White Member AFIT-ENV-MS-16-M-158 Abstract The correct measurement of earned value on agile software development programs has recently been identified as a concern by software developers implementing agile development methods. This research attempts to address the difficulties in reporting earned value on agile development programs, and the differences between the measures of completion in agile development versus earned value reporting. The major difference was identified to be in translating between the work originally planned and the work that was “recently” planned as part of the agile development process. This difference, if not transparent, leads to different measurements of earned value and inconsistent reports of a program’s progress. iv Acknowledgments Thank you to my family, friends, and colleagues who have provided countless hours supporting this thesis. Support came in many forms – pulling data, proofreading, listening, advising, and even consoling – for all of which I am very appreciative. ~ Elizabeth Hodson v Table of Contents Page Abstract .............................................................................................................................. iv List of Figures .................................................................................................................. viii List of Tables .......................................................................................................................x I. Introduction .....................................................................................................................1 General Issue ................................................................................................................1 Agile Background .........................................................................................................3 The Agile Process .........................................................................................................4 Earned Value Management Background ......................................................................6 Earned Value Management Process .............................................................................7 Problem Statement and Research Questions ..............................................................10 Methodology...............................................................................................................11 Assumptions/Limitations ............................................................................................12 Review ........................................................................................................................13 II. Literature Review ..........................................................................................................14 Chapter Overview .......................................................................................................14 Relevant Research ......................................................................................................14 Review ........................................................................................................................19 III. Methodology ................................................................................................................21 Introduction ................................................................................................................21 Data Source ................................................................................................................21 Measures Chosen ........................................................................................................22 Measures Compared ...................................................................................................24 Data Limitations .........................................................................................................26 Chapter Summary .......................................................................................................27 IV. Analysis and Results ....................................................................................................28 Chapter Overview .......................................................................................................28 Part I: Applied Examples to AgileEVM .....................................................................29 Part II: Earned Value Measurements - Data Selection ..............................................40 Changes to the Budget at Completion ........................................................................43 Percent Completed Each Month .................................................................................47 Schedule Variances ....................................................................................................51 Cost Variances ............................................................................................................56 Summary.....................................................................................................................60 vi V. Conclusions and Recommendations ............................................................................62 Review ........................................................................................................................62 Conclusions of Research ............................................................................................63 Recommendations for Future Research......................................................................65 Summary.....................................................................................................................66 Appendix ............................................................................................................................68 JMP® Output for Percent Change to the BAC............................................................68 JMP® Output for Percent Complete Each Month .......................................................70 JMP® Output for Percent Completed Each Month by Quartile Period of Time ........72 JMP® Output for Percent Schedule Variances (SV)...................................................79 JMP® Output for Percent Schedule Variance (SV) by Quartile Period of Time ........81 JMP® Output for Percent Cost Variances (CV) .........................................................90 Bibliography ......................................................................................................................92 vii List of Figures Page Figure 1: Waterfall versus Agile Process........................................................................................ 5 Figure 2: Depiction of Earned Value Management ........................................................................ 7 Figure 3: Collaboration within CADE ......................................................................................... 22 Figure 4: Months under Contract by Development Method ......................................................... 43 Figure 5: Cumulative Growth in BAC over Time ........................................................................ 44 Figure 6: Growth in BAC during 0-25% of Contract Period .......................................................