Story point estimating using the Fibonacci sequence is the most common agile estimating technique. It provides better and more accurate estimates than hourly estimates with less variation. Story points also cut estimation time by 80% allowing teams to estimate and track work more. Regularly measuring a team's velocity enables accurate forecasting of schedules and costs for a release. Agile estimating with story points is more efficient than traditional techniques.

1. The Power of
Story Point
Estimating

2. Trends in Agile Estimating
 Story point estimating using Fibonacci
sequence is most common
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Story points with Fibonacci 40%
Story points (FP, LOC, hours, ideal days) 18%
T-Shirt sizes 10%
Function points 8%
Hours 9%
Other 8%
Ideal Days 5%
Lines of code 1%
Source: Forrester Research Q32013 Global Agile Survey

3. Research Findings

“The way we do story point estimation gives better estimates than hourly
estimates as they are more accurate and have less variation.” (Forrester Group
Research)

“Story point estimation cuts estimation time by 80% allowing teams to do
more estimation and tracking than a typical waterfall team. A telecom
company noticed that estimated story points with planning poker was 48
times faster than waterfall estimation practices in the company and gave as
good or better estimates.” (Forrester Group Research)

“Story points are therefore faster, better, and cheaper than hours and the
highest performing teams completely abandon any hourly estimation as
they view it as waste that just slows them down.” (Forrester Group Research)

“New research findings show that agile estimation is astoundingly more
accurate than traditional project estimation.” (Microsoft)

4. Why do we Estimate?

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Cost and schedule transparency
Manage perceptions
Set clear expectations
Enable Product Owner to prioritize and
maximize business value
 Enable team to establish realistic goals
and commitments

5. Agile Estimating Best Practices
size is estimated, velocity is measured, duration is derived, cost is calculated
1.
Estimate Size
•
•
INVEST User Stories
Fibonacci Number Sequence
–
–
–
2.
Measure Velocity
•
3.
Use standard deviation
Calculate Cost
•
5.
4-6 Sprints to determine velocity
Derive Schedule
•
4.
Anchor Story
Mike Cohn’s Planning Poker
Wall Technique
Apply math formulas
Inspect and Adapt / Recalibrate

6. Agile Concept
Relative Sizing is used to manage the inherent uncertainty
in estimating large requirements.
Do Not
Do
Estimate by units of time
Size by complexity, comparing one story to another

7. Fibonacci Numbers

8. Leo
“Liber Abaci”

9. Using Fibonacci
1. INVEST User
Stories
2. Comparative size
the Stories using
the modified
Fibonacci
Sequence
3. Choose an
Anchor Story

10. Size the Jedis

11. Why Story Points?
Relative Sizing is used to
manage the inherent uncertainty
in estimating large requirements.
With significant uncertainty,
the more precise we are,
the less accurate we are.

12. Story Point Benefits
 Provides meaningful information to drive
prioritization based on business value
 Fosters communication & collaboration
 Enables focus on the big picture
 Avoids unnecessary precision
 Improves team psychology
 Estimation is easier & faster
when considered in relative
terms

13. Agile Concept
The average number of story points a team gets done in a Sprint.
“Agile processes promote
sustainable development. The
sponsors, developers, and users
should be able to maintain a
constant pace indefinitely.”

14. Understanding Velocity
 Predictability
 What can be done by a specific date
 When something can be completed
 How much business value (work) a team can
deliver over time
 Accuracy
 Developing a consistent velocity allows for
more accurate release and sprint planning

15. Forecasting the Release Date & Cost
 Inputs
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Team member allocation (from capacity planning)
Team Velocity (4 – 6 sprints)
Apply Standard Deviation
Forecast Formulas
 Outputs
 Project Cost Estimate
 Project Schedule Forecast

16. Forecasting Formulas
 Derive Schedule
 Determine Velocity
 Apply Standard Deviation to obtain the range
 (Total Story Points / Velocity) + 1 = Number of Sprints +/Standard Deviation
 Estimate Cost
 Number of Sprints * Allocation * Number of Resources * Bill
Rate = Estimated Labor Cost +/- Standard Deviation

17. Forecast Schedule Example
 Derive Schedule
 Product Backlog = 200 pts
 Sprint Progress
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Sprint 1 = 30 pts
Sprint 2 = 20 pts
Sprint 3 = 45 pts
Sprint 4 = 25 pts
Remaining points = 80
Velocity = 30
Standard Deviation = 11
Remaining Story Points / Velocity = Number of Sprints = 2.6
Forecast is 3 more Sprints +/-1 Sprint when Standard
Deviation is applied

18. Forecast Cost Example
 Estimate Cost
 Number of Sprints * Resources * Allocation converted to
hours worked in a Sprint * Bill Rate
 Range of Sprints was 6 to 8
 3 Team members at 80% allocation (96 hours/week)
 Bill Rate = 80.00/hr
 Cost Estimate Range is $138,240 - $184,320
 Avg Cost Per Story Point = $768
• (Resource*Allocation*Bill Rate)/Avg Story Pts
 Avg Cost Per Sprint = $23,040

19. Forecast Calculator

20. Publish Your Release Forecast
 After all user stories are Sized, and team
Velocity is measured, then the Duration
can be derived, and Cost calculated
 The forecast is then published as a
project Release Date and Labor Expense
size is estimated, velocity is measured, duration is derived, cost is calculated

21. Agile Concept
Regularly revisit estimates and forecast
“At regular intervals, the team
reflects on how to become
more effective, then tunes and
adjusts its behavior
accordingly.”

22. Agile Estimating is Efficient
 Story Point Technique
 6 - 9 months
 5360 - 7680 hours
 Effort to forecast cost &
schedule: 2
hours
 Traditional Technique
 6 - 9 months
 5120 - 7500 hours
 Effort to forecast cost &
schedule: 30
hours

23. Summary
 Power of Story Points using Fibonacci
 Helps Product Owner to prioritize to maximize
business value
 Enables clear communication to set
expectations
 Helps team set realistic goals & commitments
 Enables cost & schedule forecast accuracy
 Always use ranges for estimates & numbers
for facts
size is estimated, velocity is measured, duration is derived, cost is calculated