QEVM: QUALITY INTEGRATED EARNED VALUE MANAGEMENT A THESIS SUBMITTED TO THE GRADUATE SCHOOL OF INFORMATICS OF THE MIDDLE EAST TECHNICAL UNIVERSITY BY PINAR EFE IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE DEGREE OF DOCTOR OF PHILOSOPHY IN THE DEPARTMENT OF INFORMATION SYSTEMS AUGUST 2015 QEVM: QUALITY INTEGRATED EARNED VALUE MANAGEMENT Submitted by PINAR EFE in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Information Systems, Middle East Technical University by, Prof. Dr. Nazife BAYKAL ___________________ Director, Informatics Institute Prof. Dr. Yasemin YARDIMCI ÇETİN ___________________ Head of Department, Information Systems Prof. Dr. Onur DEMİRÖRS ___________________ Supervisor, Information Systems, METU Examining Committee Members: Prof. Dr. Semih BİLGEN ___________________ Computer Engineering Dept., Yeditepe University Prof. Dr. Onur DEMİRÖRS ___________________ Information Systems Dept., METU Assoc. Prof. Dr. Aysu BETİN CAN ___________________ Information Systems Dept., METU Assoc. Prof. Dr. Altan KOÇYİĞİT ___________________ Information Systems Dept., METU Prof. Dr. Ali YAZICI ___________________ Software Engineering Dept., Atilim University Date: 24.08.2015 I hereby declare that all information in this document has been obtained and presented in accordance with academic rules and ethical conduct. I also declare that, as required by these rules and conduct, I have fully cited and referenced all material and results that are not original to this work. Name, Last Name : Pınar Efe Signature : _____________________ iii ABSTRACT QEVM: QUALITY INTEGRATED EARNED VALUE MANAGEMENT Efe, Pınar Ph. D., Department of Information Systems Supervisor: Prof. Dr. Onur Demirörs August 2015, 152 pages Software project management discipline is in need of valuable tools and techniques to complete projects in agreed scope, on time and within budget according to customer needs. Earned Value Management (EVM) is a simple and powerful performance management and feedback tool, which is widely used in project management with an increasing interest particularly in last decade. EVM clearly displays the project progress in terms of scope, cost and schedule and enables predicting future of the project based on the trends and patterns in the past. Even though EVM addresses and integrates three main elements of a project- scope, schedule and cost- , the quality aspect is not explicitly considered in EVM. Instead it is supposed to be implicitly included in the scope. This approach might work for several project management disciplines, but software projects require special attention at this point. They have substantial rework effort due to its essential characteristics. By defining quality, doing things right first time, these reworking costs are directly related with the quality. Quality factors are affecting project progress and future significantly. In this study, we propose a new EVM model, Quality Integrated Earned Value Management (QEVM), which integrates quality element into traditional EVM to monitor and control software projects better and more accurately. The model utilizes the concepts of the Cost of Quality (CoQ). We performed an initial exploratory case study to identify the shortages of EVM for software projects before developing the model. Later, we performed a multiple case study including six cases in six different companies to explore the applicability of the model. Keywords: Earned Value Management, Software Project Management, Reworking in Software Projects, Cost of Quality, Failure Costs iv ÖZ KKDY: KALİTE ENTEGRE EDİLMİŞ KAZANILMIŞ DEĞER YÖNETİMİ Efe, Pınar Doktora, Bilişim Sistemleri Tez Yöneticisi: Prof. Dr. Onur Demirörs Ağustos 2015, 152 sayfa Yazılım proje yönetimi, projeleri planlanmış içerik, zaman ve maliyetle, müşteri ihtiyaçlarına uygun bir şekilde tamamlamak için faydalı araç ve tekniklere ihtiyaç duymaktadır. Kazanılmış Değer Yönetimi (KDY), proje yönetimi alanında yaygın bir şekilde kullanılan ve özellikle son on yılda popülerliği artmış, basit ve güçlü bir performans yönetimi ve geri bildirim aracıdır. KDY, içerik, zaman ve maliyet açısından projenin ilerlemesini net bir şekilde gösterir ve geçmiş eğilim ve örüntülere dayanarak projenin geleceğini tahminleme imkanı sunmaktadır. Projelerin üç ana unsuru olan içerik, zaman ve maliyet boyutlarına odaklanmasına rağmen, kalite boyutu açık bir şekilde bu model içerisinde dikkate alınmamaktadır. Bunun yerine kalite boyutunun içerik boyutunun bir parçası olduğu varsayılmıştır. Bu yaklaşım birçok proje yönetimi disiplininde doğru olsa da, yazılım projeleri bu konuda özel ilgiye ihtiyaç duymaktadır. Yazılım projeleri doğası gereği ciddi bir şekilde yeniden yapma faaliyetleri ile karşı karşıya kalmakta olup, bununla ilişkili olarak kalite faktörleri projenin ilerlemesini sonradan önemli ölçüde etkilemektedir. Bu tez çalışmasında, yazılım projelerini daha iyi ve doğru izlemek ve kontrol etmek için, kalite boyutunu geleneksel KDY yöntemine entegre eden, KKDY adını verdiğimiz yeni bir KDY modeli geliştirilmiştir. Model geliştirilirken kalite maliyetleri kavramlarından yararlanmıştır. Modeli geliştirmeden önce KDY’nin yazılım projeleri için eksikliklerini belirlemek üzere iki projeyi kapsayan çoklu bir araştırma durum çalışması gerçekleştirilmiştir. Modeli doğrulama amacıyla da altı farklı şirkette altı projeyi içeren çoklu bir durum çalışması gerçekleştirilmiştir. Anahtar Kelimeler: Kazanılmış Değer Yönetimi, Yazılım Proje Yönetimi, Yazılım Projelerinde Yeniden Yapma Faaliyetleri, Kalitenin Maliyeti, Hata Maliyetleri v To Cemile, Ramazan and Işıl Efe vi ACKNOWLEDGEMENTS I would like to express my deepest gratitude to my supervisor Dr. Onur Demirörs for his guidance, encouragement, endless patience and continuous support throughout the years of my study. I could not accomplish this study without his support and inspiration. I wish to express my appreciation to Dr. Semih Bilgen and Dr. Altan Koçyiğit for their support, critical suggestions and valuable comments throughout the steering meetings of this study. My studies would not be complete without the collaboration of colleagues and friends from Siemens, IC Terra and Türk Telekom. I want to present my sincere thanks to my managers, Vedat Uslu from IC Terra and Selçuk Alimdar from Türk Telekom for their support. I would like to thank the project managers, quality managers and all the other staff of the companies who contributed this research by their voluntarily support. I am thankful to my friends, Dr. Nurcan Alkış and Dr. Özden Özcan Top for their friendship and close collaboration. Special thanks go to Dr. Ayça Müge Sönmez for her encouragements, support and friendship. My heartfelt thanks to my dear friends, Asena Şanlı, Berfin Aktaş, Burçay Erçetin, Gonca Gedik, Muharrem Görkem, Ömer Sarıkoç and Süheyla İkiz for their continuous encouragement, infinite tolerance and moral support in my never ending studies during years. I am very lucky to have them in my life. A very special gratitude goes to my mother Cemile Efe, my father Ramazan Efe and my lovely sister Işıl Efe for their endless love and for being there anytime I needed. vii TABLE OF CONTENTS ABSTRACT IV ÖZ V ACKNOWLEDGEMENTS VII TABLE OF CONTENTS VIII LIST OF TABLES X LIST OF FIGURES XV LIST OF ABBREVIATIONS XVII CHAPTERS 1. INTRODUCTION 1 BACKGROUND OF THE PROBLEM ................................................................................................... 2 STATEMENT OF THE PROBLEM ...................................................................................................... 3 PURPOSE OF THE STUDY.................................................................................................................. 5 RESEARCH METHOD ........................................................................................................................ 6 ORGANIZATION OF THE THESIS...................................................................................................... 6 2. RELATED RESEARCH 7 BRIEF HISTORY OF EVM ................................................................................................................. 7 METHOD OVERVIEW ........................................................................................................................ 8 EVM LIMITATIONS .........................................................................................................................11 EVM EXTENSIONS ..........................................................................................................................16 COST OF QUALITY ...........................................................................................................................19 COST OF QUALITY FOR SOFTWARE PROJECTS ...........................................................................20 3. THE PROPOSED MODEL: QUALITY INTEGRATED EVM 23 OVERVIEW .......................................................................................................................................23 QEVM AND PROJECT MANAGEMENT PROCESS ........................................................................26 NEW MEASURES OF QEVM ..........................................................................................................29 Failure Cost (FC) ................................................................................................................... 29 Actual Cost with Failure (ACF) ....................................................................................... 32 Estimated EV (EVest) ..........................................................................................................