RE: Managing Extreme Programming

George,

> So how is the value estimated?  Looking at the chart, it appears that the
> "value" is considered to be the amount that was budgeted for
> production.  In
> other words, that code component you mention is worth $100 to the customer
> just because it was estimated up front that it would cost $100 to produce
> it.  If that's true, the Cost Variance devolves into a synonym for
> Estimation Inaccuracy.
>
> This troubles me, as I prefer some independent measure of the value of the
> thing produced.  I can see, however, that for many projects, particularly
> DOD ones, it would be very difficult to produce a value figure any other
> way.  But it still troubles me.  In business the value might be more
> objective, such as the Present Value of a stream of cost savings over the
> expected life of the product.

I think your perception is correct but that there is still some
justification
for using the budget as value: it's the amount that the customer was willing
to pay, therefore it must be the agreed on value.

There's a pretense here, but it's no worse than many other pretenses we
use to make sense of a complex world.

And it also has a convenient side effect: it separates the responsiblility
of the customer from the developer. The customer - i.e. the one who has made
the budget is responsible for whether that budget amount makes sense in
light of what the project is really worth - whatever that is. The developers
are responsible for the actual expenditure as compared to that budget.

However, while it can work for an overall project, I don't think it's
something
you would use at a fine-grained level. There's no reason to think that the
relative value of a particular story will be proportionate to it's cost.

Charlie Poole
[email protected]
www.pooleconsulting.com
www.charliepoole.org




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