10 Agile Estimation Techniques (Stages, Benefits & Downside)


Agile methodology can help any team get faster, improved results with different continuous iterations of the same product. But even in agile, a team must be able to predict how fast they can complete a project. That’s where agile estimation comes in.

Agile Estimation Techniques-A Complete Guide

Today, we’re going to look at what agile estimation is, how agile estimates can help, and different techniques for agile estimation that can help you.

Definition Of Agile Estimation

Agile estimation helps you create an estimate for completing a priority task from the product backlog. Usually, this measure is taken to estimate the time required for task completion. When you have an accurate estimation, you can start planning sprints.

Estimations are also made from user stories. These user stories are used to determine the difficulty of implementing a feature and inform the product owner.

Reasons Why Team Agile Estimation Is Important

A common phenomenon that results in varying development and launch times within agile software development agencies is overestimating or underestimating certain features.

With agile estimation, the developer team can perform accurate user story estimations, which helps the team to stick to a proper schedule.

Better Decision Making

With the right estimation, the agile teams working on a project can prioritize the right objectives from the backlog. It can also improve agile project planning capabilities.

Better Team Coordination

Agile estimation can also help with team coordination. For example: If Project B is waiting for Project A to be completed, the estimation of Project A can help estimate the timeframe for Project B.

Better Risk Management

Software development projects frequently suffer from exceeding budget and development timelines. Agile estimation can help the team stick to the budget and plans by defining the user story better and providing accurate estimations for each stage and feature.

Stages of Agile Estimation

1. Conducting Stakeholder Interviews

The estimation starts with the business analyst revisiting all the existing documentation and gathering all the gaps and queries from said documents.

Based on these queries, the BA will hold regular workshops with all the stakeholders to discuss all the gaps. It also helps to clear up all the doubts about the system workflow. These workshops can be held over calls or in a one-on-one session where the stakeholders are physically present.

The information collected from these workshops helps the BA to come up with the business and functional requirements with documents:

  • Business Requirement Document (BRD): defines the project’s end goal.
  • Functional Requirements Document (FRD): This document describes the required features to achieve the end goal.

2. Defining A High-Profile Product Backlog

This step of estimation requires the BA to collaborate with the Technical Architect. Together they create the framework of an initial outcome that the stakeholders seek. This framework includes a feasible solution or a product.

Based on the detailed requirements of the product, the TA will create a high-end product backlog focusing on user stories and determine if the backlog addresses the project’s scope for the client.

3. Understanding The Client

The discovery phase begins when a UX analyst is taken on board to work with the BA. The UX analyst works on understanding the client and the potential users/ customers.

UX analyst also creates detailed user personas based on the people who will use the application in different scenarios and all the touchpoints of the user persona within the system.

4. Prioritize Requirements

After receiving validation from the stakeholders, the discovery team starts working on the cost estimations of the project while working on the high-end backlog.

The team performs an analysis to prioritize work from the backlog to determine the feature that should be completed first.

5. Preparing The MVP Backlog

Based on the priority assessment, the team determines all the “must-have” functions and puts them together in an MVP backlog. The MVP backlog will also contain additional features that can help the product compete in the market.

6. Estimating Project Timeline and Costs

The discovery team prepares another analysis that estimates the timeline and cost with a complete MVP roadmap. The build-measure-learn process is repeated until the product development team has a good estimation.

10 Agile Estimation Techniques To Put In Practice

1. Planning Poker

This method uses a number-coded deck of cards distributed among the team members. These cards hold a value of 2-10. This is one of the most popular estimation techniques since it encourages team participation by including the entire team in the process.

While reviewing the user stories, each team member will select a card based on their priority. Once the user story review is complete, everyone reveals their cards to show their priority for said story. Over several rounds, they decide on the priorities of each user story using the same method.

The team members can also ask additional questions about the user story if they have any queries during the card revealing phase. The method decides on an estimate everyone agrees with.

2. Analogy

In this method, the development team will compare the user stories with each other and compare the size of the user stories. A relative sizing approach helps with better estimation.

For example, Your team has been using story A for a few weeks. Now your team has come across story B, which is twice as large as story A. Since story B is larger, your team will assign a larger estimation number.

Once the 

team has assigned several stories an estimation number, the team triangulates the estimations with the higher value. If the requirement has been satisfied, the team moves on to work on the next one.

3. T-Shirt Sizing

The T-shirt size estimation technique is quite an interesting one. Here, the estimations are made based on t-shirt sizes. It’s informal, but the creativity of this technique has made it popular among agile teams and team leaders.

Here, all the user stories are organized according to different t-shirt sizes. Bigger user stories get bigger sizes assigned to them. The size of one story is determined by analyzing the previous story sizes and comparing them all.

Once all the user stories have been sorted according to their sizes, the team members can start working from the smallest size and work towards the larger sizes. This is because implementing smaller user stories takes less time and effort, making the process more efficient.

4. Dot Voting

This technique is best for when the team is working with fewer user stories. Each team member has a certain number of dots assigned to them. They can place several dots based on the priority they want to give a certain user story.

When all members finish assigning all the dots on all the user stories at hand, they categorize each story based on the highest priority. The team then proceeds to work on the story that has the highest priority but will take the least effort to implement within a short period.

5. Affinity Mapping / Affinity Grouping

It’s a direct alternative to the planning poker method. In affinity grouping, all the similar stories that seem relative are put in the same group. The team continues to rearrange the stories based on relevancy till they have a clear set of groups.

6. Bucket System

The bucket system is another agile estimation method that works with a larger number of user stories (50-500). The method starts with one task set in the middle, and each task related to the first task is put into the bucket. Each task will have a number value assigned to them as well.

There are different buckets for different priorities, and the entire team will come together in collaborative discussions to review all the tasks once they have been assigned to their related buckets. In this method, an agile development team must ensure that all the tasks are evenly distributed among all the buckets.

7. Three-Point Method

There are times when a project ends up taking more time than what was estimated before beginning. The three-point method is the best way to eliminate this issue. The three-point method takes three different approaches to estimation.

  • Optimistic Estimation: In perfect working condition, what is the most ambitious estimate for this user story?
  • Pessimistic Estimation: In case I face a lot of unanticipated blockers, what’s the most conservative estimate for this user story?
  • Practical Estimation: What is this story’s most practical and likely estimation?

Once all three estimates have been made, the average of the three will determine the priority of a process before proceeding to the next one.

8. Fibonacci Sequence

The Fibonacci serial is a wonder of mathematics that has found more popularity within agile teams for software projects. In the Fibonacci serial, a sequence is formed where each number is the sum of the previous two numbers. For example, 1-2-3-5-8-13-21-34-55.

It’s easier for the team to determine the right priority number for each story on the Fibonacci scale and reach the right priority with the estimation process.

9. Random Distribution

In the random distribution method, all the product backlog items are set in a list in random order. Each team member takes their time to analyze and decide to move certain objectives higher or lower based on personal preference.

Once everyone has finished their turns, the developer team has a list of tasks sorted according to their priorities.

10. Large, Small, Uncertain

This technique is easy to explain and offers a quick estimation. Here, your team takes a “divide-and-conquer” approach. All the tasks and user stories are moved into three categories: large, small, or uncertain. Then the team starts with the small tasks and moves up the chain till only the uncertain ones remain.

Once done, the team does the same assessment with all the uncertain tasks to sort them into large or small categories by comparison and continue to complete them using agile development methods.

Downsides of Agile Estimation

  • The estimations don’t often count for the uncertainties that may arise during the development phase.
  • None of the estimates can be final; they are constantly changing. While they can give the team leaders an idea, it’s just a rough estimation, not the final idea.
  • The team members can often get carried away with the estimations and use them to judge other teammates-which is a negative practice.
  • Estimates may become over-inflated, creating a counter-productive environment.
  • The estimations can sometimes get higher instead of lower based on the information.

To Wrap It Up

The agile estimation approach can save project managers and agile team leaders a lot of hassle when calculating the timeframe and budget of a project. Agile estimations can also help the team prioritize the right tasks to maintain the true agile pace.

At Impala Intech, we take full advantage of all the agile estimation techniques so that our clients can determine the right user stories to use them best for agile project management.


What Is Agile Estimation, and Why Are Agile Estimation Practices Important?

Agile estimation is the method of creating budget and time estimates for an agile project. It’s important to know the accurate estimates of any project to mitigate the business risks while making better business decisions.

How Does Agile Estimation Differ From Traditional Project Estimation?

Agile estimation continues to change and improve while the project is in progress, while traditional project management methods require the estimation before work has even begun.

What Is the Main Challenge of Agile Estimation?

The biggest challenge of agile estimation is to calculate the best estimation of the project. Because any data and requirement can change at any time, no estimation can be considered the “final estimation.”

How Do I Choose the Right Agile Estimation Technique for My Project?

There are a lot of different agile estimation techniques, and you should choose the estimation template that your team feels comfortable with while providing the most accurate prediction to ensure proper planning.

How Often Should You Re-Estimate in Agile?

Re-estimation in agile planning techniques occurs each time a certain iteration of the product has been published. The team will re-estimate based on their remaining priorities to make the process more and more efficient every time.