While traditional project management methodologies often describe value management processes and techniques, the approach agile frameworks follow to manage value is different.
Value Management in Waterfall Projects
The PMI methodology introduces Earned Value Analysis (EVA) and Management (EVM) as processes of the control cost process group.
This includes measuring cost and schedule against the budget and planning baseline and determining schedule and cost variances and performance indexes to monitor the performance of the projects. Deviations and necessary adjustments are identified by using a to-complete performance index and estimate at completion.
At the initiation stage, a project business case requires cost benefit analyses of different project options. This involves net present value and return on investment calculations, for instance.
Value Creation and Management in Agile Projects
Agile projects follow a different approach to value generation that cannot directly be measured with those traditional value measures.
In fact, agile projects focus on value generation at their core, aiming to producing shippable increments within a time boxed development cycle. Thereby, they are following a backlog that is usually prioritized taking value and risk of features and requirements into consideration. Thus, value generation is a key element and goal of agile projects.
For the measures, agile projects require a different set of indicators, tailored to the individual approach chosen by an agile team. A popular way of measuring value production against an iteration backlog are burn down charts. Often, teams assign story points or another type of non-monetary relative values to features and requirements when estimating the efforts per item. A burn down chart shows the total amount of these points planned for one iteration, the ideal (often linear) planned progress and the actually created value stemming from entirely finalized features.
When prioritizing the backlog, techniques such as qualitative risk assessment and ranking as well as business-driven considerations such as MoSCoW analysis (ordering requirements from must have to won’t have kinds of items) ensure that the most valuable items are developed first.
While traditional project management approaches require comprehensive value management processes and techniques, agile frameworks have value already ‘built in’. Considering value as a criteria to prioritize items and measuring progress of an iteration with methods such as burn down charts implement value management in agile frameworks.