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How to estimate budget for Agile project
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How to estimate budget for Agile project
  1. Formulate initial project backlog
  2. Prepare and estimate the USs using Planning Poker
  3. Determine the team’s Velocity
    1. Need about 2-3 iterations to understand it
  4. Using the team’s burn rate and velocity to calculate the budget for the Iterations
    1. use basic formula for estimating budget
      1. (totalStoryPoints / velocity * teamHoursPerSprint) + nonLaborCosts = budgetEstimate
      2. Estimate Budget Using Iterations
        1. Estimate your iteration backlog in story points
        2. Sum all the story points
        3. Use the mean of your historical or guesstimated velocity as your denominator
        4. Divide your story points by your velocity to get the number of sprints you expect will be needed
        5. Multiply the number of sprints by 40 hours per week per team member to get your labor cost
        6. Add capital costs, equipment costs, maintenance costs, training costs, or other items that might be charged against the project.
        7. Plan for something to go wrong
        8. Report the final total as a range with formal or informal confidence intervals.
        9. Summary
          1. Use Specific Labor Categories
          2. => Annual loaded cost of each team member / number of theoretical iterations in a year = fixed burn rate per iteration for that team member
          3. => Sum (every team member’s specific fixed burn rate per iteration) = fixed iteration burn rate
  5. Think and Add capital costs for project
  6. Using the definition of “done” add pre- and post- project budgets
    1. Is maintenance phase?
  7. Think about risk factor to the overall estimate
  8. an estimate is simply an approximate calculation of the effort and cost it might take to complete a project.
    1. Why not COCOMO II & SLIM
      1. require fairly detailed requirements and design specifications
      2. require you to analyze your detailed specifications to count certain functional and technical aspects to plug into their complex estimation algorithms.
    2. 5 Project Budget & Cost Estimation Techniques
      1. Top-down estimation
        1. decide the total, then divide that total into the tasks or phases
      2. Analogous estimation
        1. use data from similar projects to decide a similar total
      3. Parametric estimation
        1. using data and variables to calculate the total
      4. Three point estimation
        1. get three different estimates and take an average to calculate the total
      5. Bottom-up estimation
        1. estimate all the individual parts and add them together to get the total
  9. Sources
    1. http://www.agileadvice.com/2011/02/04/agilemanagement/calculating-a-budget-for-an-agile-project-in-six-easy-steps/
    2. https://www.leadingagile.com/2012/11/calculate-budgets-agile-team/
    3. https://www.smartsheet.com/ultimate-guide-project-cost-estimating
    4. https://pm.stackexchange.com/questions/17373/how-to-estimate-a-project-budget-using-story-points
    5. https://thedigitalprojectmanager.com/project-budget-cost-estimation-guide/
    6. https://blog.capterra.com/how-to-calculate-agile-project-budgets-and-stick-to-them/
    7. https://www.agilest.org/agile-project-management/budgeting/
  10. Remember
    1. Valid for constant Team
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