Agile estimation techniques: How do they work?

Agile estimation techniques are a game changer for project planning because they are more flexible and accurate than traditional methods. I’ve seen teams increase productivity by 30% with these methods. You’ll discover how to use story points, relative sizing, and team velocity, and applying these techniques can also transform your project management. So how do these techniques work, and why are they so effective?

Agile Estimation Techniques Overview

Agile estimation techniques are a game changer in project planning, as they emphasize flexibility and collaboration. Agile estimation differs from traditional estimation in several key ways.

Relative sizing is the core concept of agile estimation as opposed to exact timing. Instead of estimating tasks in hours, teams estimate tasks in relation to other tasks. This is because in software development, it’s nearly impossible to predict timing exactly.

Agile estimation involves the entire team. In contrast, traditional estimation often occurs at the manager or stakeholder level. By involving the whole team in agile estimation, the estimates are far more accurate and realistic.

Regular re-estimation is another core principle of agile estimation. Throughout the project, as the team learns more, they update their estimates. This process of iterative estimation significantly improves estimate accuracy.

The benefits of agile estimation are:

• More accurate estimates: Traditional estimation models are only 25-50% accurate in initial estimates. Through iterative estimation, agile estimation reduces project uncertainty by 30-50%.
• More flexibility: Agile estimates allow you to change project scope and priorities without pushback.
• More team buy-in: When the whole team estimates, the team members feel a sense of ownership and commitment to the estimates.
• Better risk management: Re-estimation allows you to identify and solve problems early.
• You’ll find that these principles of agile estimation are a good fit for software development, as they empower your team to make better decisions throughout the project.

Planning Poker: A Collaborative Estimation Technique

Planning poker is a consensus-based agile estimation technique that incorporates expert opinion, team collaboration, and game mechanics to achieve accurate estimates.

Here’s how Planning Poker works:

• Gather the team and product owner.
• Present a user story or feature to be estimated.
• Discuss the item to ensure everyone has a shared understanding.
• Each team member secretly selects an estimation card.
• Everyone reveals their card at the same time.
• Discuss the reasons behind discrepancies in estimates.
• Re-estimate if necessary until you reach consensus.

Planning Poker has several advantages:

• Reduces individual bias by 43%.
• Drives team participation and engagement.
• Taps into the collective wisdom and experience of the group.
• Encourages discussion and shared understanding.

The downside of Planning Poker is that it can be time consuming for larger backlogs and isn’t the best option for remote teams.

To ensure your Planning Poker sessions are effective:

• Keep the session focused and time boxed.
• Ensure everyone understands the estimation scale.
• Encourage discussion if estimates are too far apart.
• Select an experienced facilitator to guide the process.

The collective estimate from Planning Poker is 30-40% more accurate than individual estimates. Use this technique when your key objectives are driving more team collaboration and achieving more accurate estimates.

Story Points and Relative Sizing

Story points are a unit of measure that represents the overall size of a user story, feature, or other piece of work. They represent the relative effort of an item.

Relative sizing means ranking items relatively as opposed to assigning them an absolute value. This is 40% faster than traditional hour based estimating.

The Fibonacci sequence (1, 2, 3, 5, 8, 13, 21…) is a common story point scale because it’s a non-linear sequence that accurately represents the increasing uncertainty of larger estimates.

Various story point scales:

To ensure your team accurately estimates story points:

• Set a base story to use as a reference
• Rank based on effort not time
• Take into account complexity, risk, and uncertainty
• Periodically check that your team shares the same understanding of story points

Story points and relative ranking offers a more flexible and faster approach to estimating in agile. You’ll also work through estimates in a more collaborative way, and it accommodates the natural uncertainty of software development.

T-Shirt Sizing: Simplifying Estimation

T-shirt sizing is an easy agile estimation technique that anyone can do. You use common size categories (XS, S, M, L, XL, XXL) to estimate work items.

This method is best for:

• Initial backlog grooming.
• High level project planning.
• Estimating a lot of items at once.
• Agile beginners.

How to use T-shirt sizing with your agile team:

• Define size categories and what they represent.
• Choose a reference story for each size.
• Show items to be estimated.
• Each team member selects a size that represents relative effort.
• Discuss and agree on sizes.

Pros of T-shirt sizing:

• Very simple and easy for anyone to understand.
• Fast way to get rough estimates.
• Non-technical stakeholders can participate.

Cons of t-shirt sizing:

• Less accurate than numerical methods.
• You might need to translate to story points later.
• Not enough precision to distinguish slightly different items.

T-shirt sizing is a simple agile estimation strategy. It’s also particularly helpful for initial project planning and high level backlog grooming when you just need something quick and easy.

Team Velocity and Sprint Planning

Team velocity is the total amount of work a team accomplishes in a sprint. You calculate it by summing the story points of all completed items in a given sprint.

To calculate and track velocity:

1. Record the story points completed each sprint.
2. Average it over the last 3-4 sprints.
3. Update it as the team changes or improves its processes.

Velocity is important for both sprint planning and forecasting. It tells you how much work a team can commit to in future sprints and how long a project will take.

Variables that impact velocity:

• Team makeup and size
• Length of the sprint
• If technical debt or infrastructure work needs to be completed
• If there are outside dependencies
• General team focus and/or disruptions

Issues with velocity-based estimation:

• Velocity changes from sprint to sprint
• People using it as a key performance indicator (KPI)
• Relying too much on past data for future planning

Velocity should stabilize after 3-4 sprints. Once it does, historical velocity data is 85-90% accurate in predicting the work for the next sprint.

Just remember that velocity is a planning tool, not a productivity measure. It will be most accurate if you also use other agile methods and regularly conduct team retrospectives.

Three-Point Estimation in Agile

Three-point estimation is a technique that considers three scenarios: optimistic, likely, and pessimistic. It’s derived from the Program Evaluation and Review Technique (PERT).

The PERT formula for three-point estimation is:

Estimate = (Optimistic + 4 x Likely + Pessimistic) / 6

To use three-point estimation for user stories:

1. Bring the team together.
2. Talk through the story and clarify any questions about the requirements.
3. Have each team member provide three estimates.
4. Calculate the final estimate using the PERT formula.
5. Discuss and adjust if necessary.

Benefits of three-point estimation in agile:

• Reduces uncertainty by 40%
• Better risk assessment by 35%
• Considers both best and worst-case scenarios
• Forces the team to talk through potential risks and obstacles

Three-point estimation is a more sophisticated agile estimation technique. You’ll especially find it useful for more complicated stories or when you have a high degree of uncertainty in your projects.

Affinity Estimation for Large Backlogs

The affinity estimation is a great way to size a large number of items at once. It’s ideal for initial backlog refinement or project planning.

You should use affinity estimation if you have a large backlog of unsized items and want high-level estimates as quickly as possible. You can also use affinity estimation if you want the entire team to participate in the estimation process.

Here’s how to do an affinity estimation session:

• Write each backlog item on a card or sticky note.
• Select two reference items (one small and one large) and place them on a wall or board.
• Ask team members to silently place each item relative to the reference items.
• Discuss any discrepancies and then define size categories based on item clusters.
• Assign size values to the categories.

The main benefits of the affinity estimation are that it’s an easy way to size many items at once and it encourages team collaboration. Additionally, you can see a visual representation of item sizes and it’s easy to identify outliers or inconsistencies.

The affinity estimation is a great strategy when you have a lot of backlog items to size. It’s also an excellent option when you’re just beginning to plan a project and need to size a lot of items at once.

Dealing with Estimation Challenges in Agile

Agile estimation has its own challenges. Understanding these challenges can help you overcome the estimation process more effectively.

Common estimation challenges:

• Pressure to give accurate estimates
• Disregarding historical data and team velocity
• Forgetting non-development related tasks
• Estimating in hours instead of using relative sizing
• Not involving the entire team in the estimation

How to improve estimate accuracy:

1. Use relative sizing instead of absolute estimates
2. Continuously review and update estimates
3. Involve the whole team in the estimation process
4. Consider all tasks including testing and integration efforts
5. Use historical data and team velocity as a reference

For larger, more uncertain stories:

• Break them down into smaller stories that are easier to estimate
• Use spike solutions to research more information
• Apply a higher uncertainty factor to the estimate

How to continuously improve estimation:

• Hold retrospectives specifically about estimation accuracy
• Track and measure estimates versus actual effort
• Change and improve your estimation approach based on insights
• Create an environment where team members feel comfortable talking about challenges and uncertainty

Remember, 60-80% of project estimation issues are usually the result of people and process problems, not a technical challenge. Focusing on team dynamics and refining your estimation process can produce substantial improvements.

By addressing these challenges, you’ll master how to give accurate estimates in agile. This will result in better sprint planning and more successful projects. Implementing agile tools can also greatly improve your project workflow and help manage these estimation challenges more effectively.

Parting Thoughts

Agile estimation techniques are changing the game for project planning because they’re more flexible and accurate than traditional methods. You’re now familiar with Planning Poker, story points, T-shirt sizing, and several other excellent tools. These tools will help your team estimate more accurately and be more adaptable. However, like anything else, the more you practice, the better you’ll become. So start using these techniques today, and your projects will be better for it. The journey to better estimation begins today.