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Forecasting for beginners


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Simple forecasting with my spreadsheet - as presented at London Lean Kanban Days 2018 LLKD18

Published in: Leadership & Management
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Forecasting for beginners

  1. 1. Forecasting For Beginners Dan Brown
  2. 2. About Me Dan Brown Kanban Coach & Teacher @KanbanDan
  3. 3. • We often talk about estimates as if they are something meaningful • We normally mean forecast when we say estimate • Forecasts aren’t guesses
  4. 4. Maths is our friend (honest) • Maths often gets a bad rep • We often think of complex things we had to learn from first principles at school • But you don’t need to understand the inner workings of an engine to be able to drive a car • It’s a good idea to have an expert on hand when the engine needs fixing Solve x and y where: y = x2 - 5x + 7 y = 2x + 1
  5. 5. The problem with Disneyworld • What’s the downside of Disneyworld for guests? • Avoiding the queues • There’s an App for that… • It uses historic data and the “Travelling salesman problem” • The right maths in the right place • Longest Disney queue I’ve stood in was 15 minutes
  6. 6. Gameshows? • The “Monty Hall Problem” drives maths undergrads mad • 3 doors, one prize • What are the odds you pick the right door? • 33% • What if Monte removes a losing door? What are your odds now? • Should you change your choice?
  7. 7. Agreeing terms • PRODUCT – A service that makes sense to a customer • EPIC – a big story. Too big for a team to finish in a fortnight • STORY – a single unit of work that finishes in between 2 and 9 days
  8. 8. Lets think in Asteroids Epics Products Stories
  9. 9. Ready Player 1 What happens if we shoot an “Product” sized asteroid?
  10. 10. Shoot a “Product” Slow “Products” break into 3 medium paced “Epics”
  11. 11. Shoot an “Epic” Medium paced “Epics” break into 4 fast paced “Stories”
  12. 12. How did this strategy work out? Oops!
  13. 13. Then this usually happens We get an Expedite work item to deal with!
  14. 14. Back to sanity We could finish epic 1’s 4 stories, then the next epic of product 1… That way we always finish something valuable rather than showing progress on lots of things
  15. 15. Conclusion (The answers near the front of the book)
  16. 16. Step one - Workshop • Run a workshop to break down your initial product into epics
  17. 17. Step two • Break down the first 5 epics into stories • Count the stories in each epic • Ignore the middle 3 numbers • Assume the Biggest and Smallest represent the range • Assume the mid point of the range is the median number of stories per epic X X X X XX Fewest stories Most stories
  18. 18. Step three – get to work! • Measure the Lead Time to complete each of the first 11 stories. • Initial data gathering is done! • You can also use the 85th Percentile as your story SLA KEEP CALM AND START WORK!
  19. 19. Graph time • You now have enough data to draw a Cumulative Flow Diagram (CFD). • Number of stories on Y axis against date on the X axis • Shows “To Do”, “Doing” and, “Done” • Plot a cone of certainty using 15th and 85th Percentiles
  20. 20. To Do Done Doing X
  21. 21. CFD Forecasting Key Points • Always use ranges, not individual dates • Make it visible • Teach people how to read it • The truth is the truth. • This makes it visible, undeniable and non-negotiable • Moves the conversation on to business decisions • This is real data from a real development team…
  22. 22. Frequency chart 85th %ile • Lead time frequency chart will show YOUR Weibull distribution • Use this to help decide when to start time bound stories
  23. 23. Where do I start • Go to • Click on PredictiveCFD • Download the Excel workbook • Make yourself a new copy and open the workbook • You need to play with 2 sheets • Setup • On The Board
  24. 24. Setup sheet • I used the standard Excel formatting for Input cells • You can only change the salmon coloured cells Blank out the two dates hereSet this date to the first date of your delivery Set this dropdown to 11 Set to your work item types
  25. 25. On the Board This is all of the data for the sample sheet
  26. 26. On the Board Clear it off and start adding your stories No gaps in dates entered My favourite cheat formula =IF(ISNUMBER([@[Ready For Demo]]),[@[Ready For Demo]],"") (If the cell to my right is a number, show it here too. If not show a blank cell here) Lets you skip columns you don’t want to use Remember weighting of 1
  27. 27. And that’s it… • You can now look back in wonder at your wonderful • Cumulative Flow Diagram • Lead Time Frequency Chart
  28. 28. Why it all works • Explaining the magic numbers (just in case you don't trust me)
  29. 29. Let's talk WWII tanks • The Panzer V was a big heavy tank. It had better armour, range and accuracy than the Sherman. • The Allies needed to know how many were in France to plan D-Day
  30. 30. How many tanks? • Eisenhower asked both Military Intelligence and the Bletchley Park Boffins to work on it • This is known as "The German Tank Problem" MI BPB June 1940 1000 169 June 1941 1550 244 Aug 1942 1550 327 Real 122 271 342
  31. 31. Maths beats estimates • So do we need to do lots of maths? • Good news - you don't. • There IS a formula, but I'm not going to bother you with it today.
  32. 32. The answers • With 5 samples you are 12.5% likely to find a bigger value and 12.5% likely to find a smaller value than your existing range. 75% chance within range • With 11 samples you make that 90% chance inside range, 5% above and 5% below.
  33. 33. Putting it to use •It works for: •tank gearbox serial numbers •story sizes •or even dating partners
  34. 34. Why not just estimate? • How do you weigh something big on bathroom scales? • Cut it up and weigh all the small parts? • The problem is the tolerance cumulates and makes the measurement so inaccurate it’s useless • 200 days ± 120 days isn’t much use to us
  35. 35. Should we stop estimating? • Estimates are useless, estimation is essential • The benefit of whole team estimation is the sharing of tacit knowledge, just before working on the thing we’re talking about. • It deliberately introduces conflict • No groupthink
  36. 36. Getting started • all you need is: •a date stamp (or a pen) •a spreadsheet (or some graph paper)