How to Estimate Story Points?

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How to Estimate Story Points?

Story points play a vital role in Agile development. They help teams estimate the effort and complexity involved in completing tasks or user stories. By understanding how to estimate story points accurately, Agile teams can better prioritize their work, allocate resources, and manage expectations.

In this article, we'll explore the concept of story points and provide a step-by-step guide to estimating story points effectively.

The Role of Story Points in Agile Development

Agile story points are important for agile estimation. While in traditional project management (e.g., Waterfall) project goals and business requirements are the same, Agile methodology assumes that they can be changed.

So if a client decides to implement changes during the project lifecycle, it can easily be done. Even though some goals might have been set up, for example, two years ago. That's what story points in Agile are for. To help estimate work and assess the overall effort required.

They are the measure of task complexity and are used to determine the difficulty, the time needed for completion, and importance for a given milestone.

And there's no specific definition or principle governing story points in Agile—the assumptions are flexible. Only after you finish one story point (a task), can you start another.

Additionally, story points aren't the measure of productivity but they help to improve it.

Understanding Story Points in Agile Development

What exactly are story points? Seemingly easy, story points in Agile can cause a lot of trouble since they're often misunderstood and misused. So to effectively use them, you need to understand story points and their role in project management.

Story points are a unit of measurement used in Agile development to estimate the effort, complexity, and risk associated with a user story or task.

Unlike traditional time-based estimates (hours, days, or years), story points allow teams to account for the various factors that may impact the completion of a task, providing a more holistic and flexible approach to estimation.

How to Use Story Points?

Story points help to estimate the complexity of a task. So, for example, if your task is to add a feature to an app and you know it's an easy task, you assign it one story point. But if you have to add five features, you may assign three story points.

Usually, story point estimations are used as a Fibonacci sequence (1, 2, 3, 5, 8, 13...). So, if you know the task to be simple, it has a single story point. But the more complex the task, the more story point values you give.

What's more, you can use story points as a reference story for future estimation discussions. That helps to compare previous estimates with current projects and decide how much effort is needed.

In general, the more effort you put into the task, the more story points you give.

The Purpose of Story Point Estimation

The main purpose of story points in Agile development is to provide a relative measure of the effort and complexity involved in completing user stories or tasks.

But there are many more reasons why story points are used in Agile project management methodologies. Here are the main ones:

  1. Facilitate prioritization: by making story points estimate, Agile teams can better understand the effort and complexity involved in completing each task, enabling them to prioritize tasks more effectively. It also helps to improve product backlog as story points eliminate unimportant work.

  2. Inform resource allocation: accurate story point estimate helps Agile teams allocate their resources effectively, ensuring that tasks are completed efficiently and on time.

  3. Track progress and velocity: story points allow teams to track their progress and velocity, providing valuable insights into team performance and areas for improvement.

  4. Planning and scheduling: story point estimates help in determining how much work can be accomplished in a given sprint or iteration. By assigning story points to user stories, the development team can forecast the amount of work that can be completed within a specific time frame, allowing for better planning and scheduling of tasks.

  5. Predictability: provides a basis for predicting the team's velocity—the average number of story points the team can complete in a sprint. Over time, the velocity becomes a useful metric for predicting future delivery dates or assessing the impact of adding or removing user stories from a sprint.

  6. Collaboration and communication: encourages collaboration and discussion among team members. During the estimation process, team members with different perspectives and expertise come together to collectively assign story points based on their understanding of the complexity, risks, and effort involved. This fosters better communication and shared understanding for every team member.

  7. Trade-off analysis: allows for trade-off analysis between features or user stories. By comparing the estimated story points of different work items, the team can prioritize and make informed decisions about what can be achieved within a given timeframe with relative values. This helps in managing expectations and making decisions on scope adjustments, especially when faced with time constraints or changing requirements.

  8. Continuous improvement: completed story points provide a feedback loop for the team to reflect on their estimation accuracy and improve their estimation skills over time. By comparing the estimated story points with the actual effort required to complete the work, the team can learn from their past experiences and better calculate story points for future estimates.

It's important to note that the Agile estimation technique is not meant to be an absolute measure of time. Instead, it focuses on relative sizing and provides a framework for the team to plan, collaborate, and improve their delivery process.

How to Estimate Story Points: A Step-by-Step Guide

Assigning story points is easy if done the right way. It also helps to improve the team's performance in the long term as it enhances work, even with complex tasks.

Here's a step-by-step guide to help you easily estimate Agile story points.

1. Familiarize Yourself with the User Story

Begin by reviewing the user story in detail, ensuring that you understand the requirements and objectives.

The user story describes the product functionality in the product backlog. It's who wants what and why. In other words, a user story is a guideline for the entire project.

A user story may have different complexity, so not all story points will need as much effort.

Remember, the better you know the user story, the better you can assign values

2. Break Down the User Story

Divide the user story into smaller, manageable tasks, helping to provide a clearer picture of the work involved.

According to this article at Atlassian, "No individual task should be more than 16 hours of work. " If it is, you should re-estimate it and break it into smaller tasks.

In general, it's good to keep tasks small but not too small. It'll help avoid micromanagement and save time.

3. Establish a Baseline

Determine a baseline story point value for a simple, well-understood task, which will serve as a reference point for estimating other tasks.

Specify which tasks should have one story point, two story points, and other relevant story point value. That way, the whole team will know what to refer to and will stay on the same page.

4. Consider Effort, Complexity, and Risk

When estimating story points, consider the effort required to complete the task, the complexity of the task, and any potential risks or uncertainties associated with the task.

A good story point estimate should include such aspects as sprint velocity and each team member's effort so your product owner can effortlessly prioritize and assign work.

It'll provide an improved understanding of the task and boost team's productivity.

5. Use a Relative Estimation Technique

Employ a relative estimation technique to assign story points to each task in relation to the baseline task.

Here are the Agile project management techniques you can use in proper planning:

  • The Fibonacci sequence—the most popular technique where each number is the sum of the two preceding ones. The idea is to reflect the exponential increase in uncertainty and complexity as the numbers increase. In software development, smaller numbers represent simpler and less complex tasks, while larger numbers indicate more complexity.

  • Story point estimation matrix—story point matrix consists of a grid or matrix with rows representing complexity levels and columns representing effort levels. By assigning story points based on the intersection of complexity and effort, the story point matrix provides a consistent and relative measure for estimating user stories. The Fibonacci sequence also can be used here.

  • Planning Poker—the team collectively estimates the story points for a user story by playing Planning Poker. Each team member privately selects a card indicating their estimate, and all the cards are revealed simultaneously. Planning poker encourages active participation and helps generate discussions to reach a consensus.

  • T-Shirt size estimation—in this method, you assign the sizes of a t-shirt (XS, S, M, L, XL, etc.) instead of numerical values. Each size represents a relative level of effort or complexity, such as XS for very small and simple tasks, and XL for large and complex ones. This method provides a quick and easy estimation approach, especially for high-level backlog prioritization.

  • Reference stories—the team identifies a few user stories that are representative of different levels of complexity or effort. These reference stories are assigned story points, and during estimation, new stories are compared to these reference stories to determine their relative size. This technique helps maintain consistency and reduces estimation biases.

  • Bucket system: the team creates predefined buckets or categories, each representing a range of story points. For example, bucket 1-3 may represent low complexity, 4-6 medium complexity, and 7-10 high complexity. The team places each user story into the appropriate bucket based on their collective judgment and understanding.

  • Expert judgment: Sometimes, the team may rely on the expertise and experience of a few members or subject matter experts to evaluate story points. These experts review the project and provide their estimation based on their knowledge and understanding of the project domain. The team then discusses and adjusts the estimates as needed.

When choosing an estimation technique, consider the team's familiarity with the techniques and their preference for collaboration or individual judgment. If the team has prior experience with Planning Poker, for example, it could be a suitable choice because it encourages discussion and consensus, reducing the chances of one person underestimating or overestimating a task. Otherwise, it could result in twice as much effort to complete it later.

So choose the technique that is relevant to the size of a project, the number of team members, and each person's experience.

6. Discuss and Agree on Estimates

Encourage open discussion and collaboration among team members to arrive at a consensus on story point estimates.

Effective estimation for Agile team involves taking into account the specific acceptance criteria that define the completion criteria for each user story. Additionally, considering how many sprints the team will have provides a temporal context.

Through these discussions and agreements, the team establishes a solid foundation for transparent planning and successful execution of the project.

How to Make Story Points Accurate?

Except for actual numbers and values you need to assign in Agile project management, there are important components that will improve team collaboration and work management.

Here are the three factors to consider for a successful and accurate planning process:

  1. Historical data and team's velocity: these provide valuable insights into past performance. Analyze the team's velocity, which is the average number of story points completed per sprint planning, to understand the team's capacity and productivity. By comparing estimated story points to the actual ones completed, you can identify patterns, trends, and any deviations from expectations. This data helps in calibrating future estimations and making them more accurate.

  2. Collaborative estimation and diverse perspectives: involve the entire development team in the estimation process to ensure diverse perspectives. Collaborative estimation sessions allow team members with different areas of expertise to contribute their insights. This approach helps in capturing a broader range of factors influencing team effort and complexity, leading to more accurate estimations. Encourage open discussions, active participation, and consensus building during estimation sessions.

  3. Decomposition and understanding of user story: breaking down every user story into smaller, well-defined tasks contributes to accurate story point estimate. Decomposition allows for a more detailed analysis of the work involved, uncovering complexities and dependencies that might be missed at a high level. When team members have a deep understanding of the stories and their associated tasks, they can more accurately assess the effort required to complete them. Ensure that stories are well-defined, and any ambiguities or uncertainties are clarified before estimation.

It's essential to embrace a mindset of continuous learning and improvement, refining estimations over time-based on feedback and experience.

Tips for Effective Story Point Estimation

By following these tips, you can achieve more accurate and effective story point estimations, enabling better planning and decision-making in agile development.

Take a look at what you can do to improve your estimation process:

1. Focus on relative sizing

Remember that story points are a relative measure of effort and complexity. Avoid translating story points directly into time-based estimates, as this can undermine the benefits of using story points.

PRO TIP: Using time tracking and planning tools, for example, TimeCamp Planner, can significantly improve planning. Such tools allow you to automate and optimize workflow, eliminate tedious tasks, and give insight into team's arrangement.

2. Keep estimates team-specific

Story point estimates should be specific to your team and should not be compared to estimates from other teams, as each team's experience and expertise may differ.

3. Review and refine estimates

Regularly review and refine your story point estimates as the project progresses and new information becomes available.

4. Avoid over-precision

Story point estimation process is not an exact science. Embrace the inherent uncertainty in estimation and focus on providing reasonable, informed estimates rather than striving for perfect precision.

5.Use a unified system for your project

The right software will make the estimation process easier and faster. A good planning app such as TimeCamp Planner allows you to keep everything in one place—product backlog, sprint planning sessions, files, messages, and important information.

Use it to know how your team works, what outcomes your team delivered, and better estimate future story points.

Mastering Story Point Estimation for Agile Success

Story points contribute to project success and help to better estimate future projects. Effective story point estimation is a critical skill for Agile teams, enabling better prioritization, resource allocation, and progress tracking. By understanding the purpose of story points and following a structured approach to estimation, your team can harness the full benefits of this powerful Agile tool.

With practice and collaboration, your team will become adept at estimating story points, leading to more accurate planning and improved project outcomes.