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What are “Story Points”?

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If you’re a beginner Agile practitioner, chances are you’ve come across story points – an effective tool for estimating the overall effort needed to complete product backlog items or other tasks. In this blog post, we’ll explore the fundamentals of story points, including their significance and the process of calculating them. We will compare them with traditional man-hour or man-day estimation methods, and we’ll outline their advantages in Agile estimation.

 

Understanding Story Points

“When is it going to be done?” is one of the favorite questions of Stakeholders, Managers, and Product Owners. 

The traditional approach to answering that question is to ask someone (usually an expert) to provide you with a time estimate in terms of man-hours or man-days.

And Voilà! You assign that number to the work item and communicate it to leadership.  

All is good until you find out, in reality, the estimate could not be further from the truth.

 

What is the problem with this “traditional” approach?

Firstly, it’s crucial to understand that people are terrible at giving precise estimates in terms of time. Even if it is a task that we’ve done many times before, let alone if it is a completely new one. And we are even worse if the task is bigger. So, whatever time estimate we get from people we know it is not gonna be true.

Secondly, the person providing the estimate is usually not the one performing the actual work. If we struggle to estimate our completion time for a specific task, estimating how long it will take someone else is even more challenging.

We may not know who exactly is going to do the work. People have different levels of knowledge, skills, and experience, and if a specific task might be very easy for one and takes 2 hours for example, it might be extremely hard for another who is going to do it for 8. What is the “right” number – 2 or 8? Whatever you pick, you will be wrong 50% of the time. Thinking to pick the average? Then you’ll be wrong 100% of the time.  

The increasing complexity of work in today’s world means that multiple individuals might need to collaborate on a single work item. This added complexity makes estimating precise time even more difficult.

Furthermore, the modern work environment is characterized by growing uncertainty and risk, making it challenging to anticipate every aspect of a task or project.

Due to these challenges, team members frequently disagree on estimates, leading to time-consuming and contentious discussions. This results in wasted effort, as the focus shifts from delivering value to debating estimates that may ultimately be incorrect.


What’s the alternative?

Story points are a unit of measure used in Agile project and product management to express the overall team effort required to fully implement a product backlog item or any other piece of work.

They help Agile teams to estimate tasks relative to one another, rather than time. When using story points, Agile teams allocate a point value to a work item, by comparing it to another one in terms of effort to complete it. 

For instance, a work item given 2 story points should require twice the effort of a 1-point story and two-thirds the effort of a 3-point story.

The primary benefit of story points is their ability to facilitate communication и agreement on an estimate among team members with varying skill levels. Rather than debating how long it might take each individual to complete a task, teams can quickly determine that one user story needs twice or three times as much effort as another. With story points, it’s all about relativity.

Story Points are not a substitution for some arbitrary time frame!

A common mistake we’ve seen is when teams start assigning time values to story points, for example saying something meaningless like “1 Story Point equals 3 hours of work”. By doing this, you’re just mimicking and not getting the value story points are providing. Even worse, you’re adding additional complexity that creates more confusion and frustration.


Calculating Story Points 

Story points serve as a representation of the effort needed to develop a task, usually described as a User story or product backlog item. Estimating effort involves taking several factors into account, such as the amount of work required, the work’s complexity, and any risk or uncertainty involved. 

Let’s examine the impact of each factor on the effort estimate provided by story points.


The Amount of Work

If there is more work involved in a specific item, the estimate of effort should be proportionally larger.


Work’s complexity

Work’s complexity should also be factored into a story point estimate. A highly complex work item would be more time-consuming to complete in comparison to a more simple one. The additional complexity should be reflected in the estimate.


Risk and Uncertainty

The level of risk and uncertainty in a product backlog item should influence the story point estimate.


Story Points vs. Man-Hours

What are the key differences between the “Agile” and “Traditional” approaches toward estimation and forecasting?


Flexibility and Adaptability

Story points offer a more flexible and adaptable approach to estimation, as they focus on relative effort instead of time. This allows Agile teams to better accommodate changing requirements and priorities throughout the product development. On the other hand, man-hour or man-day estimation methods, which quantify effort based on the time a task takes, tend to be less flexible in adapting to changes.


Independence from Skill Levels

Story points allow team members with different skill levels to communicate and agree on an estimate without getting into debates about individual work speeds. In contrast, man-hour or man-day estimation methods are based on how long a task might take for a specific individual, which can lead to disagreements and inaccuracies.


Forecasting and Velocity

Agile teams use story points to calculate their velocity (i.e., the rate at which they complete work). This helps them better forecast the amount of work they can accomplish in future sprints. Man-hour or man-day estimation, on the other hand, can be less effective in predicting a team’s future performance since it doesn’t account for the variability in individual work speeds.


Conclusion

Story points offer a more effective and efficient way of estimating effort compared to traditional time-based approaches. By focusing on relative effort rather than specific timeframes, story points enable teams to account for the complexities, risks, and uncertainties that are inherent in today’s dynamic work environment.

As you venture into the world of Agile, remember that story points are a valuable tool for fostering better communication, enhancing team collaboration, and improving overall project success.

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If you are an aspiring leader seeking to unlock the full potential of Agile for your organization, our professional Agile coaching services can help. Our experienced Agile coaches will guide you through the complexities of Agile transformation and support you in applying Agile principles to your organization, ensuring success in today’s ever-changing business landscape.

Contact us today to discuss how we can help you on your Agile journey!

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