Story points to Time and Cost
While working in Agile projects / product developments, we use the story points for estimating user stories in backlog, but often we been asked ‘How much “time” or “cost” it will take to deliver?’ and all we have is story points…!
To derive the time from story points is simple done when we have team size and their capacity, estimated user stories in story points and delivered user stories (also called velocity).
Velocity – is based on actual points completed, which is typically an average of all previous iterations. Velocity is used to plan how many backlog items the team should bring into the next iteration. (In other word, describes how much work the team can do per unit of actual time.)
Focus Factor – is team’s ability to remain focused on the iteration goals without any other distractions.
Focus Factor = Velocity / (Team size *Daily available work hours)
Agile team size is five members; Eight hours is daily available work hours; Velocity of Iteration is Thirty story points
Focus Factor will be: 30 / (5*8) = 0.75
Team Capacity – is the Focus Factor multiplied by the total number of available hours of the team for an iteration; Iteration duration is number of working days.
Team capacity = Focus Factor * (Team size *Daily work hours* Working days in a Iteration)
Team capacity would be 0.75 * (5*8*10) = 300 hours
This means, team will have 400 hours – 300hours = 100 hours for Iteration Planning, Daily Stand-Ups, Iteration Review, Backlog refinement, Iteration Retrospective, Breaks, team meetings, discussions with product owner and other needs that pops-up during the Iteration.
Once the equation is solved to get the time, the cost estimation will be achieved by using defined hourly cost.