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Agile Budgeting, Scheduling
and Forecasting (v 3.0)
June 2015 by Robert Betcher PMP, CSM & ACP
www.agilemethodology.us
1
Budgeting
The corner stone of budgets for Agile projects is somewhat straight forward
and broken down into two categories:
Resource and Non Resource Costs
2
Formulas
Resource Cost:
Employee Cost Per Hour (EH)
Hours Per Day (HD)
Number of Team Members (NT)
Number of Days in Sprint (NS)
Resource Cost Per Day
(EH x HD) = Employee Per Day Cost (PD)
Resource Cost Per Sprint
(PD x NT) x NS = Resource Cost Per Sprint (RS)
Sprint Cost
RS + Non Resource Cost (NR) = Sprint Cost (SC)
Story Point Cost
SC ÷Team Velocity (TV) = Story Point Cost (PC)
Release Cost
SC * (Sprints per Release) = Release Cost (RC)
Team Cost Per Year
SC * Sprints Per Year (SY) = Yearly Cost
3
Formulas
Schedule / Capacity:
Team Sprint Velocity (TV)
Last Sprint Velocity (LV)
Next to Last Sprint Velocity (NV)
Third to Last Sprint Velocity (ThV)
Team Sprint Velocity
(LV + NV + ThV) ÷3 = TV
Team Release Velocity
Sprints per Release (SR) * TV = Release Velocity (RV)
Note: RV should be averaged over last 3 Releases much like
calculating Sprint Velocity (SV)
4
Formulas
Forecasts:
Work Not Done in Points (ND)
Incomplete Story Count (IC)
Estimated Story Point (EP)
Team Velocity (TV)
Cumulative Completed Story Points (CP) Note: Avg. of Last 3 Sprints
Cumulative Completed Story Count (CC) Note: Avg. of Last 3 Sprints
Estimation of Stories without Points
CP ÷CC = Estimated Incomplete Points Per Story (ES)
Estimation of Incomplete Backlog Work
(ND * IC) ÷TV = Number of Sprints to Complete (NC)
Estimation of Incomplete Backlog Work without Points
(ES * IC) ÷TV = Number of Sprints to Complete (NC)
5
Formulas
Forecasts (cont’d):
Sprint Cost (SC)
Team Velocity (TV)
Work Not Done in Points (ND)
Average Points Per Story (AP)
Count of Story Per Sprint (CS)
Estimation of Cost per Story Point
SC ÷TV = Story Point Cost (PC)
Estimation of Cost for Incomplete Backlog Work
ND * PC = Estimated Cost to Complete
Points Padding Review (based on last 5-8 Sprints – less if fewer Sprints avail.)
TV ÷CS = AP
Note: Use this formula to get the AP of each Sprint. Compare the AP of each
Sprint and look for high deviations. High deviations sometimes are the root of
Points Padding by teams.
6
Budgeting
How do we calculate Resource costs (explained)?
We begin with a Team. We calculate all the pay rates for the Team Members on a per Sprint basis. If we
have 5 Team members at $50.00 an hour per person, and they are paid for an 8 hour day, then the cost
per day is $400 per person. If they are Full Time Employees (FTE), then we, also, break down their pay
on a per day basis. If a FTE makes $52K a year and there are 52 weeks a year, then we divide
$52,000.00 by 52 weeks. This is $1000.00 a week or $200.00 a day.
If we have 3 FTE’s making $52K a year and 2 Contractors at $50.00 an hour, our per day cost is
$1,400.00 a day or $14,000.00 per 2 week Sprint. This is excluding any non-resource costs (e.g.
equipment, travel, training, etc…)
If the Team has a velocity of 50 points a Sprint, then the point cost for that Team will be $14,000.00
divided by 50 which would equal $280.00 a story point.
Now, if the Team has 2 Sprints per Release, then their Release Cost will be $28,000.00.
If the Team is doing 14 Releases a year, their cost per year would be $364,000.00 plus non resource
costs.
7
Scheduling
A Team can schedule their work by assessing their velocity. This is often an average of story points
from the last 3 to 5 Sprints. If a Team (using a 3 Sprint average) had 40 Points in Sprint 1, 50 Points
in Sprint 2 and 60 Points in Sprint 3, then the Team’s velocity is 50 points per Sprint. If the backlog
has 30 Stories at 100 points, then the Team could possibly complete this work in 2 Sprints.
If the release has 400 points, then the Team could finish that release within 8 Sprints.
What if the Team has not completed any Sprints? How do we calculate their velocity? This is a
best guess scenario that will require base-lining again after Sprint 1, Sprint2 and Sprint 3 to
recalculate the Schedule and Cost in accordance with the Team’s performance.
Many Teams will guess at their velocity for Sprint 0 and use guess for forecasting. For instance they
may guess 40 points, which will result in their completion of a 400 point backlog (baring any scope
additions) in 10 Sprints.
Note: Agile does allow Scope changes and Scope Additions, which is why smart managers budget a
management reserve, for not only their Schedule, but for their budget.
8
Forecasting
Now that we have completed budgeting and scheduling, forecasting is easy, barring any points
padding or points inflating (see addendum concerning padding).
If there is a Feature that has 10 stories at 100 points, then we can forecast that our Team will be able
to complete this Feature within 1 release or 2 Sprints if there is a 50 point velocity. That feature will
cost $28K without considering non resource costs.
So what does one do if they have 100 stories in a backlog with no points assigned?
We can make an estimate by using the Team’s last 3 Sprints. We count all the stories from the
Team’s last 3 Sprints. Let’s say this would be 30 stories at a velocity of 50. We will then add up all
the points from the Team’s last 3 Sprints, which is 150 points. We divide the number of stories by the
number of points for the last 3 Sprints to come up with an average of 5 points per story. If we have
100 stories, we then multiply that by 5 to come up with an estimate of 500 story points. This would
translate to a Team, who has an average velocity of 50, would require 10 Sprints to complete the work
at a cost of $140K. If a 20% management reserve is used, this would be 12 Sprints at a cost of
$168,000 excluding non resource costs.
9
Addendum
Assessing for Points Padding – Take 5 to 8 of the last Sprints for the Team. On each Sprint, divide
the number of points by the number of stories, to get the average story points per Sprint. If the
average story points per Sprint, is increasing more than a reasonable amount, then the Team may be
padding (if there has been no addition of Team members to the Team).
The biggest problem with points padding, besides it giving management a false sense of
performance, is that it destroys any means of forecasting and estimating efficiently.
In the end, Points padding will impact the Team’s ability to assess what work they can or can not
commit to within a specific period of time.

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Agile Budgeting and Forecasting

  • 1. Agile Budgeting, Scheduling and Forecasting (v 3.0) June 2015 by Robert Betcher PMP, CSM & ACP www.agilemethodology.us
  • 2. 1 Budgeting The corner stone of budgets for Agile projects is somewhat straight forward and broken down into two categories: Resource and Non Resource Costs
  • 3. 2 Formulas Resource Cost: Employee Cost Per Hour (EH) Hours Per Day (HD) Number of Team Members (NT) Number of Days in Sprint (NS) Resource Cost Per Day (EH x HD) = Employee Per Day Cost (PD) Resource Cost Per Sprint (PD x NT) x NS = Resource Cost Per Sprint (RS) Sprint Cost RS + Non Resource Cost (NR) = Sprint Cost (SC) Story Point Cost SC ÷Team Velocity (TV) = Story Point Cost (PC) Release Cost SC * (Sprints per Release) = Release Cost (RC) Team Cost Per Year SC * Sprints Per Year (SY) = Yearly Cost
  • 4. 3 Formulas Schedule / Capacity: Team Sprint Velocity (TV) Last Sprint Velocity (LV) Next to Last Sprint Velocity (NV) Third to Last Sprint Velocity (ThV) Team Sprint Velocity (LV + NV + ThV) ÷3 = TV Team Release Velocity Sprints per Release (SR) * TV = Release Velocity (RV) Note: RV should be averaged over last 3 Releases much like calculating Sprint Velocity (SV)
  • 5. 4 Formulas Forecasts: Work Not Done in Points (ND) Incomplete Story Count (IC) Estimated Story Point (EP) Team Velocity (TV) Cumulative Completed Story Points (CP) Note: Avg. of Last 3 Sprints Cumulative Completed Story Count (CC) Note: Avg. of Last 3 Sprints Estimation of Stories without Points CP ÷CC = Estimated Incomplete Points Per Story (ES) Estimation of Incomplete Backlog Work (ND * IC) ÷TV = Number of Sprints to Complete (NC) Estimation of Incomplete Backlog Work without Points (ES * IC) ÷TV = Number of Sprints to Complete (NC)
  • 6. 5 Formulas Forecasts (cont’d): Sprint Cost (SC) Team Velocity (TV) Work Not Done in Points (ND) Average Points Per Story (AP) Count of Story Per Sprint (CS) Estimation of Cost per Story Point SC ÷TV = Story Point Cost (PC) Estimation of Cost for Incomplete Backlog Work ND * PC = Estimated Cost to Complete Points Padding Review (based on last 5-8 Sprints – less if fewer Sprints avail.) TV ÷CS = AP Note: Use this formula to get the AP of each Sprint. Compare the AP of each Sprint and look for high deviations. High deviations sometimes are the root of Points Padding by teams.
  • 7. 6 Budgeting How do we calculate Resource costs (explained)? We begin with a Team. We calculate all the pay rates for the Team Members on a per Sprint basis. If we have 5 Team members at $50.00 an hour per person, and they are paid for an 8 hour day, then the cost per day is $400 per person. If they are Full Time Employees (FTE), then we, also, break down their pay on a per day basis. If a FTE makes $52K a year and there are 52 weeks a year, then we divide $52,000.00 by 52 weeks. This is $1000.00 a week or $200.00 a day. If we have 3 FTE’s making $52K a year and 2 Contractors at $50.00 an hour, our per day cost is $1,400.00 a day or $14,000.00 per 2 week Sprint. This is excluding any non-resource costs (e.g. equipment, travel, training, etc…) If the Team has a velocity of 50 points a Sprint, then the point cost for that Team will be $14,000.00 divided by 50 which would equal $280.00 a story point. Now, if the Team has 2 Sprints per Release, then their Release Cost will be $28,000.00. If the Team is doing 14 Releases a year, their cost per year would be $364,000.00 plus non resource costs.
  • 8. 7 Scheduling A Team can schedule their work by assessing their velocity. This is often an average of story points from the last 3 to 5 Sprints. If a Team (using a 3 Sprint average) had 40 Points in Sprint 1, 50 Points in Sprint 2 and 60 Points in Sprint 3, then the Team’s velocity is 50 points per Sprint. If the backlog has 30 Stories at 100 points, then the Team could possibly complete this work in 2 Sprints. If the release has 400 points, then the Team could finish that release within 8 Sprints. What if the Team has not completed any Sprints? How do we calculate their velocity? This is a best guess scenario that will require base-lining again after Sprint 1, Sprint2 and Sprint 3 to recalculate the Schedule and Cost in accordance with the Team’s performance. Many Teams will guess at their velocity for Sprint 0 and use guess for forecasting. For instance they may guess 40 points, which will result in their completion of a 400 point backlog (baring any scope additions) in 10 Sprints. Note: Agile does allow Scope changes and Scope Additions, which is why smart managers budget a management reserve, for not only their Schedule, but for their budget.
  • 9. 8 Forecasting Now that we have completed budgeting and scheduling, forecasting is easy, barring any points padding or points inflating (see addendum concerning padding). If there is a Feature that has 10 stories at 100 points, then we can forecast that our Team will be able to complete this Feature within 1 release or 2 Sprints if there is a 50 point velocity. That feature will cost $28K without considering non resource costs. So what does one do if they have 100 stories in a backlog with no points assigned? We can make an estimate by using the Team’s last 3 Sprints. We count all the stories from the Team’s last 3 Sprints. Let’s say this would be 30 stories at a velocity of 50. We will then add up all the points from the Team’s last 3 Sprints, which is 150 points. We divide the number of stories by the number of points for the last 3 Sprints to come up with an average of 5 points per story. If we have 100 stories, we then multiply that by 5 to come up with an estimate of 500 story points. This would translate to a Team, who has an average velocity of 50, would require 10 Sprints to complete the work at a cost of $140K. If a 20% management reserve is used, this would be 12 Sprints at a cost of $168,000 excluding non resource costs.
  • 10. 9 Addendum Assessing for Points Padding – Take 5 to 8 of the last Sprints for the Team. On each Sprint, divide the number of points by the number of stories, to get the average story points per Sprint. If the average story points per Sprint, is increasing more than a reasonable amount, then the Team may be padding (if there has been no addition of Team members to the Team). The biggest problem with points padding, besides it giving management a false sense of performance, is that it destroys any means of forecasting and estimating efficiently. In the end, Points padding will impact the Team’s ability to assess what work they can or can not commit to within a specific period of time.