The Art & Science of Estimating User Stories Cost

Nowadays most high-quality software products are developed based on agile, iterative software engineering practices, based on methodologies like DevOps (Development and Operations), Scrum, Kanban, and XP (Extreme Programming). These agile methodologies plan, organize and execute the development work based on the so called “user stories”. To this end, they employ various agile estimation techniques.

User stories in agile projects are short, simple descriptions of a feature of the software system, which is seen from the perspective of the person who desires the new capability. In most cases, this person is a user or customer of the system. User stories are typically described based on simple templates that specify the type of user, the goal that the user wants to accomplish, as well as the reason why the user wants to achieve the specified goal. Here is what a user story template is likely to look like:  As a [type of user], I want [some goal] so that [some reason]. User stories emphasize the ‘why’ behind a feature, rather than focusing on technical details. Hence, they provide a common language for the development team, stakeholders, and customers to discuss requirements and collaborate effectively.

User stories are an essential component of the agile development lifecycle. As already outlined, they serve as the foundation for planning and prioritizing work. They help teams understand the desired outcome of a feature from the end user’s perspective.  When planning a project based on user stories it is important to be able to estimate their implementation timeline and cost.  This is the reason why the agile software development teams use a variety of techniques to estimate their cost effectively. To choose and apply the right technique, agile development project managers and software developers must first understand the importance of estimations and what they are used for.

The Importance of User Stories Estimation

User story point estimation is a crucial step in the agile process, as it directly impacts project planning, resource allocation, and overall project success. Specifically, estimating user stories is vital for the following main reasons:

• Prioritization: By estimating the cost of user stories, teams can prioritize them based on their value and effort, ensuring that the most important features are developed first.
• Resource Allocation: Estimations help determine the resources required for each story, allowing teams to allocate resources efficiently based on agile story points.
• Project Planning: Accurate estimations contribute to better project planning, enabling teams to predict delivery timelines and manage stakeholders’ expectations.
• Team Collaboration: Estimating user stories encourages team members to discuss their understanding of the requirements and collaborate to find the best solutions.

Overall, user stories are a very useful tool for agile project management. Project managers can use the cost of the user stories as a metric for planning and delivering their project within the available time and budget, and with very high quality.

User Stories Estimation Techniques

There are several techniques teams can use to estimate user stories. Here are some of the most popular methods:

• Expert Judgment: In this method, team members with relevant experience and expertise provide their estimates for each user story. This can be done individually or in a group setting, where team members discuss their estimates and come to a consensus.
• Analogy-based Estimation: This method involves comparing the current user story to similar, previously completed stories. By identifying similarities and differences, teams can estimate the effort required for the new story based on the effort spent on the previous ones. Analogy based estimation fosters the creation of a database of user stories estimations.
• Planning Poker: Planning Poker is a popular Agile estimation technique that involves the entire team. Each team member is given a set of cards with numbers representing effort (e.g., based on the Fibonacci sequence: 1, 2, 3, 5, 8, 13, etc.). For each user story, team members select a card representing their estimate and reveal it simultaneously. If there is a significant difference in estimates, team members discuss the reasons behind their estimates and repeat the process until a consensus is reached.
• T-Shirt Sizes: In this method, user stories are assigned a ‘size’ based on their complexity and effort, using categories such as XS (Extra Small), S (Small), M (Medium), L (Large), and XL (Extra Large). This helps teams quickly categorize stories based on their relative effort and can be later converted into numerical estimates.
• Affinity Estimation: Affinity Estimation is a collaborative approach where user stories are grouped based on their relative effort. Team members discuss each story and place it on a board, organizing them into columns representing different effort levels. Once all stories are placed, the team can assign numerical values to each group.

In conclusion, estimating user stories is a critical aspect of Agile Development, as it helps teams prioritize work, allocate resources, and plan projects effectively. By using techniques such as expert judgment, analogy-based estimation, planning poker, t-shirt sizes, or affinity estimation, teams can improve their estimation accuracy and set themselves up for project success. While the presented techniques aim at rationalizing the process of user stories estimation, it is widely acknowledged that the estimation process involves both art and science. Developers can sometimes intuitively and experientially provide very good estimations of user stories. Sometimes these estimations can go against the total number of software elements (e.g., user interfaces elements, business logic components, database connections) that these stories comprise.

In an era where most large scale and high-quality software systems are developed as agile projects, software teams had better invest in improving their user stories estimation tools, techniques, and practices.