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What is Effort Estimation?

Effort estimation is the process of forecasting how much effort is required to develop or maintain a software application. This effort is traditionally measured in the hours worked by a person, or the money needed to pay for this work. 

Effort estimation is used to help draft project plans and budgets in the early stages of the software development life cycle. This practice enables a project manager or product owner to accurately predict costs and allocate resources accordingly.

Effort estimation in Agile

Though effort estimation can be used in a traditional software development approach, it is more commonly associated with the Agile methodology. Here, the product owner must manage a list of project deliverables, known as a backlog. They will estimate the effort required to complete each item. Rather than using time or cost estimates, they will look at user stories and story points. 

  • A user story is a tool used to describe a software feature from the perspective of the consumer 
  • A story point is a unit that measures the amount of work in implementing a user story, taking into account the level of difficulty involved and the potential risk

A product owner will compare the features of their new project with a previous one to determine the complexity of their user story and assign suitable story points.

Agile effort estimation techniques

There are many different Agile effort estimation techniques to choose from. Here are three of the most common ones:

  1. Planning Poker: In this method, team members sit together in a circle to assign values to story points. Each individual will have a set of cards with the numerical values that can be assigned: 0, 1, 2, 3, 5, 8, 13, 20, 40, and 100. The product owner will read out a user story to the team members. They will have a discussion and then decide which value it should have. If everyone is in agreement, the final estimate is decided. If not, the team will discuss further until a consensus is reached.
  2. T-shirt Sizes: Here, story points take the form of sizes: extra-small (XS), small (S), medium (M), large (L), and extra-large (XL). Estimators will determine the sizes to get a quick and rough estimate that can be converted to numbers later. 
  3. Dot voting: This approach enables team members to sort items in the product backlog from low to high priority. User stories are posted on a board and estimators get four or five dots to use as votes. The one with the most dots is deemed the highest-priority item, and so on.

Why is effort estimation important?

According to Forbes, estimation is “an investment that you should factor into software development efforts of any substance.” 

Effort estimation is vital to the software development process as it helps teams to ensure a product is developed and delivered on time. For product owners specifically, effort estimation enables them to manage resources.

Find out how Wrike’s project management features can help you manage effort estimation and achieve success in Agile.

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