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Budgeting in
SCRUM
Tomasz Karwatka / tkarwatka@divante.co
2
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Planning
Divante’s Clients budget their SCRUM projects in various ways. Budgeting P&L
requires determining project costs in advance. Applicable approaches include:
1. Preceding cost estimation (and therefore budgeting) with a consulting
phase - analysis and design. Thus, the description of requirements is
more precise and allows for more efficient estimation with less uncertainty.
2. Creating an estimation in the „from-to” form or an estimation with a percentage
of uncertainty (if more than one person on the team makes an estimation, you can
measure the differences between them). Then, the higher estimate is put in the
budget and the potential savings are used in product development.
3. Adoption of cost estimation provided by an implementing company
and adjusting the scope of functions to the implementation on the
go - by priority and in accordance with triangle time-scope-cost-quality.
It’s the most common approach. If you adhere to the triangle and
Tim
e
C
ost
Scope
Quality
............................................................
........................................................
..................
3
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communicate on a regular basis (e.g. presenting a demo after each
sprint), your client is not taken by surprise at the end of a project.
4. Carrying out an internal project estimation by a client’s IT department
and adopting this (usually higher) amount as the cost of a project. Such
estimation may also be made by an external consultant. In fact, implementing
a project in SCRUM allows you to change a contractor during the project.
5. Completing a few sprints before budgeting – to verify the assumptions for
the most difficult parts of a project and to determine the velocity of the team.
Example: When working for Grene, we first completed the sprints responsible for
the riskiest part of the project - data migration from existing solutions to Magento.
After that, we verified the estimates and launched the main project.
6. Deploying an MVP after 50% -75% of project time elapsed. In this case, backlog
is created in such a way that after elapsing 50-75% of project time, an MVP
(Minimum Viable Product) version is deployed and the remaining time is spent
on further improvements and functional expansion. This increases the certainty of
deploying the most important functions of the system in time and within budget.
7. Ultimately, P&L planning should be based on determining the amount of
resources dedicated to a project. Software is developed by assigning functions to
be implemented in sprints. Thus, in budgeting we assume software development,
but we don’t determine what features it will include. However, you can determine
what business goals are to be met in the software development.
You can also make the granting of additional budget dependent on results
obtained in previous sprints.
4
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Risks in SCRUM
Convincing your CFO to use SCRUM can be quite difficult if the method is presented
as work without limited budget and vague scope. It is worth noting though that
CFOs and managers are heavily focused on identifying and minimizing risks. They
often prepare „what if” scenarios. SCRUM gives you a huge advantage over other
methods of work in the process of risk management.
There could be several reasons why the project has to be completed before the
planned date:
• Budget cuts
• Change in the priorities of the company
• Acquisition or other events halting development projects
• Established budget is not sufficient to realize the scope, which was widened
during the project.
What if the project has to be halted after 60% of its duration?
To demonstrate this below is a comparison of two projects. Project W is conducted
in the waterfall approach. Project S is carried out in SCRUM model.
Project W consists of the following stages:
• 10% of the time/effort - collecting requirements and scope
• 25% of the time/effort - analysis and design
• 40% of the time/effort - development and testing
• 20% of the time/effort - fixes, acceptance
• 5% of the time/effort - deployment
If you stop such a project after 60% it turns out that the team is in the process of
writing code and the business value of what we get is zero. The system simply
doesn’t work and the only finished product is a documentation.
5
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WANT TO GET THE FULL
REPORT?
Contact
Let’s talk about the best methods to help you optimize your eCommerce.
Tomasz Karwatka
CEO
tkarwatka@divante.co
Ernest Trochimczuk
CSO
etrochimczuk@divante.co
Marta Miszczak
Sales Manager
mmiszczak@divante.co
Krzysztof Podeszwa
Sales Manager
kpodeszwa@divante.co
6
www.divante.co
Divante LTD
14 Kosciuszki Street
50-038 Wroclaw, Poland
sales@divante.co
(+48) 797 340 458
www.divante.co

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Budgeting in SCRUM

  • 2. 2 www.divante.co Planning Divante’s Clients budget their SCRUM projects in various ways. Budgeting P&L requires determining project costs in advance. Applicable approaches include: 1. Preceding cost estimation (and therefore budgeting) with a consulting phase - analysis and design. Thus, the description of requirements is more precise and allows for more efficient estimation with less uncertainty. 2. Creating an estimation in the „from-to” form or an estimation with a percentage of uncertainty (if more than one person on the team makes an estimation, you can measure the differences between them). Then, the higher estimate is put in the budget and the potential savings are used in product development. 3. Adoption of cost estimation provided by an implementing company and adjusting the scope of functions to the implementation on the go - by priority and in accordance with triangle time-scope-cost-quality. It’s the most common approach. If you adhere to the triangle and Tim e C ost Scope Quality ............................................................ ........................................................ ..................
  • 3. 3 www.divante.co communicate on a regular basis (e.g. presenting a demo after each sprint), your client is not taken by surprise at the end of a project. 4. Carrying out an internal project estimation by a client’s IT department and adopting this (usually higher) amount as the cost of a project. Such estimation may also be made by an external consultant. In fact, implementing a project in SCRUM allows you to change a contractor during the project. 5. Completing a few sprints before budgeting – to verify the assumptions for the most difficult parts of a project and to determine the velocity of the team. Example: When working for Grene, we first completed the sprints responsible for the riskiest part of the project - data migration from existing solutions to Magento. After that, we verified the estimates and launched the main project. 6. Deploying an MVP after 50% -75% of project time elapsed. In this case, backlog is created in such a way that after elapsing 50-75% of project time, an MVP (Minimum Viable Product) version is deployed and the remaining time is spent on further improvements and functional expansion. This increases the certainty of deploying the most important functions of the system in time and within budget. 7. Ultimately, P&L planning should be based on determining the amount of resources dedicated to a project. Software is developed by assigning functions to be implemented in sprints. Thus, in budgeting we assume software development, but we don’t determine what features it will include. However, you can determine what business goals are to be met in the software development. You can also make the granting of additional budget dependent on results obtained in previous sprints.
  • 4. 4 www.divante.co Risks in SCRUM Convincing your CFO to use SCRUM can be quite difficult if the method is presented as work without limited budget and vague scope. It is worth noting though that CFOs and managers are heavily focused on identifying and minimizing risks. They often prepare „what if” scenarios. SCRUM gives you a huge advantage over other methods of work in the process of risk management. There could be several reasons why the project has to be completed before the planned date: • Budget cuts • Change in the priorities of the company • Acquisition or other events halting development projects • Established budget is not sufficient to realize the scope, which was widened during the project. What if the project has to be halted after 60% of its duration? To demonstrate this below is a comparison of two projects. Project W is conducted in the waterfall approach. Project S is carried out in SCRUM model. Project W consists of the following stages: • 10% of the time/effort - collecting requirements and scope • 25% of the time/effort - analysis and design • 40% of the time/effort - development and testing • 20% of the time/effort - fixes, acceptance • 5% of the time/effort - deployment If you stop such a project after 60% it turns out that the team is in the process of writing code and the business value of what we get is zero. The system simply doesn’t work and the only finished product is a documentation.
  • 5. 5 www.divante.co WANT TO GET THE FULL REPORT? Contact Let’s talk about the best methods to help you optimize your eCommerce. Tomasz Karwatka CEO tkarwatka@divante.co Ernest Trochimczuk CSO etrochimczuk@divante.co Marta Miszczak Sales Manager mmiszczak@divante.co Krzysztof Podeszwa Sales Manager kpodeszwa@divante.co
  • 6. 6 www.divante.co Divante LTD 14 Kosciuszki Street 50-038 Wroclaw, Poland sales@divante.co (+48) 797 340 458 www.divante.co