Table of Contents
What Is the Best Method for Estimating User Story Costs in Agile Projects?
Learn the most effective methods for estimating user story costs in an Agile environment. Understand how to accurately calculate project expenses based on team run rates, time constraints, and resource allocation to ensure optimal budget management.
Question
You are working as a project manager in an Agile environment. Your team is about to start working on a new project, and you need to determine how to estimate the cost for each user story. As the project progresses, your team has been focusing on maintaining flexibility while ensuring that costs are well-managed. In this Agile project, how should the cost for each user story typically be determined?
A. By assigning a fixed cost to each user story based on its size
B. By calculating the cost based on the time and resources required to complete the story
C. By using historical cost data from previous similar user stories
Answer
B. By calculating the cost based on the time and resources required to complete the story
Explanation
In Agile project management, cost estimation is intrinsically linked to the team’s run rate, which represents the fixed financial cost of the dedicated team resources over a specific timebox or iteration. While teams initially use relative sizing metrics such as story points to gauge the complexity and effort of a requirement, the actual monetary cost is derived by evaluating the proportion of the sprint’s time and resources that the specific story consumes. By dividing the total cost of the sprint by the team’s measured velocity, project managers establish a standardized cost per unit of effort, which is then multiplied by the individual story’s estimate to determine its cost based on the exact time and resources necessary for its completion.