Unplanned events, confounding setbacks, and unexpected developments potentially lead to deviations from the pre-decided plan. Accurate estimation of the effort required to complete every task included in the prioritized backlog often turns challenging for project managers. How should they precisely calculate the time and budget needed to complete a product backlog item in advance? How would they account for unprecedented impediments that might occur? Employing the right Agile estimation techniques is the only solution for making accurate computations and advancing to timely deliveries. 

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What Is Agile Estimation?

Agile estimation gauges the effort needed to achieve a prioritized task in the product backlog. Usually measured concerning the time needed for task completion, this effort leads to accurate sprint planning. Agile estimates are also made with reference to story points– a number that enables evaluation of the difficulty of successful completion of a user story successfully. 

However, it must be realized that despite accurately estimating the effort, one must keep room for impediments and not strive to achieve perfect accuracy. Changing requirements, Agile anti-patterns and other realities alter the course of development.

Principles of Agile Estimation 

Some of the basic principles of Agile estimation techniques are as follows:

  • They are collaborative: Involving everyone on the Agile development team is one of the best practices because collaborative efforts lead to better estimates. Collaborative techniques put an end to the blame game for an incorrect estimate.
  • They are designed to be fast: Faster than any traditional techniques, Agile estimation is not about predicting the future. Rather it recognizes that estimations are a non-value-added activity and tries to minimize them.
  • Use of relative units: Estimation is not in terms of dollars or days; instead, “points” or qualitative labels are employed for estimating or comparing tasks. 

What Makes the Estimation of Agile Projects Challenging?

A bottom-up approach has been a part of traditional project management methods. An individual or a team spends time upfront to formulate a schedule, plan out the tasks and deliverables, and break down each to estimate costs and hours starting from the end.

Once things get sorted, a project manager dedicates his quality time to keeping teams on track abiding by the set deadlines and allocated hours for each deliverable.

Contrastingly, in Agile project management, the order gets flipped, and you use gross-level estimation. It begins with a broad estimate for various project parts and narrows down to specifics, continually refining as more information becomes available. Without much practice, this estimation approach can be challenging for many. 

Who is Involved in Agile Estimation Activity?

As stated, Agile estimation technique determination and implementation should not be limited to a product owner or a scrum master’s list of job duties. Rather, involving the entire Agile development team can lead to better estimates because

  • Quicker assignment: Anyone can be chosen from the team to complete a task that appears at the top of the product backlog list. When everybody is involved, they have a better idea of the user story demands and the corresponding estimation.
  • Helps avoid overestimation/underestimation: The retrospective sessions and the team’s prior experience help understand the exact details of the item and the efforts it would entail. Collaborative efforts help progress with better clarity reducing the chance of inaccurate estimates.

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8 Common Agile Estimation Techniques

Considering the following factors, you can choose the most appropriate Agile estimation technique:

  • The number of tasks and items you have to estimate
  • Your team size
  • Presence of members - co-located / all-in-one office
  • Available tools that would facilitate the process
  • Working style and personalities of the team members

1. Three-point Estimate

When faced with inaccuracy problems due to commitment to a particular estimate before any work began, the three-point estimate technique was introduced. 

No matter if the same team is working on the same type of work, estimates can turn unrealistic when you fall into the trap of thinking that because you have done well before, you will be able to do it again. 

Method: The three-point estimation technique requires the creation of three values and finding their mean:

  • Most likely estimate
  • Optimistic estimate
  • Pessimistic estimate

For example: For Activity A, the three values for the estimated time are as follows:

  • Optimistic (o) = 4 hours 
  • Most likely (m) = 8 hours 
  • Pessimistic (p) = 16 hours

Calculating the mean will give us the estimated time: 

E = (4 + 8 + 16 ) / 3

E = 28 / 3 = 9.3 hours

2. Planning Poker

One of the most commonly adopted Agile estimation techniques is planning poker. 

Method: The team members vote for an estimate of an item using specially-numbered playing cards. Anonymous voting takes place, and discussions are held regarding large differences. The process is repeated until the entire team reaches a consensus about the accurate estimation. 

The technique is suitable for estimating a relatively small number of items (maximum 10) in a team of 5-8 people. 

3. Dot Voting

Another simple, Agile estimation technique is ideal for a relatively small set of items. It originates from decision-making and suits both small and large teams.

Method: Every participating member gets a small number of dot stickers to vote for the individual items. More dots correspond to more effort and time requirements. On the other hand, fewer dots indicate that the task is fairly straightforward and quick to achieve.

4. Random Distribution/ Ordering Protocol

The Relative Mass Valuation and the Challenge, Estimate, and Override methods are variations of this technique. 

Method: This technique sets items in order from low to high. The member participating in the estimation process takes turns to either move an item up or down one spot, hold discussions, or pass. The process gets completed once everyone passes on their turn.

5. T-shirt Sizes (Estimation units)

One of the simplest ways is to categorize items into t-shirt sizes: XS, S, M, L, and XL. It is an informal technique that can be used with many items for a quick estimation. 

Method: Extra Small (XS), Small (S), Medium (M), Large (L), and Extra Large (XL) act as units for this Agile estimation technique. The sizes can be assigned numerical values postestimation. The decisions are based on open and collaborative discussions. An occasional vote can be made to break a stalemate. 

6. Buckets

This technique is similar to planning poker but aims for consensus via discussion and assigning values to every task. 

Method: The facilitator begins by placing a task in the middle, and they continue to read and add tasks into the buckets relative to the first one. Team members can divide tasks, bucket them, and come back together for review. Discussions are held before finalizing the estimates.  

7. Large, Small, Uncertain

It is a fast and productive agile estimation technique like bucketing. 

Method: There are only three possible values to assign. You begin by discussing and then divide and conquer to add up tasks to the large, small, or uncertain groups.

8. Affinity Grouping

Method: The team members group similar items. In case of related tasks in scope and effort, you must place them together to get a clear set of groups.

Like in other techniques (Fibonacci sequence), you can use the same values. You can even make the groups broader to get this method closer to the large, small, and uncertain method.

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Some Additional Agile Estimation Techniques for Software Projects

In Agile development, appropriate Agile estimation techniques play a vital role in making progress. Review the below-mentioned techniques, and choose the one that best suits your organization:

1. Analogy

When estimating by analogy in Agile, you opt for a relative sizing approach. Comparing story sizes with other stories is helpful when making assumptions. 

For instance, if you have already estimated user story X for two weeks and you come across another user story Y twice as large X, you will assign Y a larger estimation number.

Using the triangulation method for estimation makes it simpler. In this approach, the user story is estimated in view of previously estimated similar intent user stories. For example, if a new story is bigger than the previously estimated story at six-story points and smaller than the one estimated at 10 — choosing eight will be a good strategy.

This Agile estimation technique is suitable when retrospectives are a part of the process and teams have a good mutual understanding and significant experience. 

2. Affinity Mapping

Do you have fewer backlog items and a small team size? Choose the Affinity mapping technique. 

Method: 

  • Silent Relative Sizing: You begin by placing two cards on a wall/board in opposite corners. Name one Smaller and the other Larger. Each participant will receive a subset item from the product owner. They have to size each item individually. 
  • Editing the Wall: The next step involves moving items from one location to another, considering the team members’ discretion. Discussions on design and implementation aspects are conducted. 
  • Placement of Items in Correct Locations: Post discussions, the team members put the items. You can use the Agile t-shirt sizing technique or the Fibonacci series to estimate the relative item size.
  • Product Owner’s Prerogative: If the product owner comes across any discrepancy in the estimations, they can discuss more features and needs of an item with the team members prior to finalizing the estimations.
  • Using a Project Backlog Management Tool: In the final step, the product owner saves the finalized estimations by transferring them to a suitable product backlog management tool.

This technique is ideal for estimating a long-term plan for a project and gaining mutual understanding from team members. 

3. Fibonacci Sequence for Story Point Estimation

Most teams use the Fibonacci sequence as a scoring scale. This linear sequence comprises the sum of the previous two numbers in the series - 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89 and so on. 

Looking at a story and determining if it is an 8 or 13 makes it easier and quicker to land an answer. Moreover, the team reaches a consensus faster. 

The Fibonacci Sequence technique is ideal when estimating large and complex tasks, and there is a need to prevent estimates from being too close to one another. 

What are Story Points? Steps to Successful Story Point Estimation in Agile

Story points- the metrics used in Agile product development. They serve as units of measurement for determining the effort needed to complete a product backlog item. Assigned based on the task’s complexity, uncertainty, and amount, these simplify the process of developing a sound implementation strategy and assessing an item’s ROI. 

Developers must consider the following three factors when making a story point estimation:

  • The complexity of the feature
  • The risk in terms of random changes, vague demands, dependency on third parties, and other uncertainties.
  • The familiarity of the team members with the feature

The following steps help in accurate story point estimation:

  • Identify user stories.
  • Discuss the user story requirements. The Product Owner or Business Analyst is responsible for answering the questions and precisely explaining what the referred story entails.
  • Formulate an estimation matrix: This matrix is a numeric scale that helps evaluate the selected pieces of the task. It can be the Fibonacci sequence (…5, 8, 13…) or the linear scale (… 3, 4, 5…). Often software teams prefer the Fibonacci scale as its gaps are more extensive than those in a linear scale. 
  • Select a suitable Agile estimation technique
  • Carry out sprint planning to decide what stories will be estimated and worked upon on priority.
  • Ensure that the estimates are consistent and align with the user stories as you go along. 

What is Sprint Velocity? How To Estimate Sprint Velocity?

Before moving on to Agile estimation techniques, it is important to understand sprint. 

A sprint is a time-boxed interval defining the allocated time to complete a task. The term sprint velocity refers to an individual team’s work rate in an average sprint.

In simpler words, sprint velocity is the value representing the number of story points that a specific team can complete in a sprint. 

Unfortunately, there is no way to estimate sprint velocity until the first sprint is completed. However, the future velocity can be envisioned when the team’s historical data is closely analyzed. Measuring the team’s actual velocity and the number of finished story points provides a reasonable data count for the determination of the number of sprint cycles required to complete the project.

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Conclusion

Various Agile estimation techniques facilitate better planning– the better the preparedness, the better the probability of ensuring faster time to market.

A good estimation relies on the golden rule that no work item must exceed 16 hours of work. If it does, break down the large user stories into smaller, manageable chunks, and rerun estimation.

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