Many software development teams dread the process of estimating a project or sprint. We get it, it’s not easy to wrap your head around all the moving parts, understand the risks, and navigate various unknowns.

You can improve the accuracy of your agile software estimations with various methodologies, one of which is using story points to gauge the amount of work required to complete a user story.

Let’s look at what story points are, how they work, why you should use this estimation method, and how to increase the accuracy of your software estimates.

What Are Agile Story Points, Exactly?

You have probably heard of story points… but what exactly are they?

Story points are units of measurement used in agile project management to gauge how much effort is required to complete a user story from the product backlog. Scrum teams often use them in sprint planning sessions to determine the amount of work they can complete within a specific time frame.

Most teams use the Fibonacci sequence to represent agile story points. Many simplify the numbers to “1, 2, 3, 5, 8, 13, 20, 40, and 100.”

The spacing between the numbers becomes further apart as the story point values get higher. It gives development teams more wiggle room to accommodate uncertainties, which tend to increase when the scope becomes larger.

Unlike hour estimates, story points are relative measurements. The value of the story points assigned to each user story depends on the team, the tasks, and how the developers perceive the potential risks.

One team may assign 5 story points to one task, while another would allocate 8 story points to build the same functionality. They may both take the same amount of time to complete the work item.

When estimating story points, consider three key factors:

• The complexity and difficulty of the task.
• Total risks or uncertainties, such as dependence on third-party vendors.
• The team’s skills and experience with similar tasks.

How Does Story Point Estimation Work?

If you’re starting to use story points, follow these steps to set your team up for success:

1. Get Everyone Onto the Same Page

While many developers have experience with software estimation and story points, don’t assume that everyone shares the same understanding of the process and nuances.

Take the time to work through the sprint planning process. Team members should know how story points work and scale before they start estimating tasks.

2. Establish What One Story Point Represents

Story points are relative and work like currencies. Before estimating specific tasks, establish an “exchange rate” unique to each agile team.

Identify the smallest task you’ll need to estimate and rate it as one story point. This work item is the baseline team members will use to calibrate other tasks. As your team gains experience, you can adjust this “exchange rate” based on historical data.

3. Set Up a Story Point Matrix

A story point matrix provides guidance on how to score each product backlog item by accounting for effort, complexity, experience, uncertainties, etc.

Like the effort that a story point represents may change over time, so will this matrix. Your first matrix will likely be a rough estimate. Don’t worry about nailing it the first time—revisit it often and adjust it based on historical data.

4. Run a Sprint Planning Meeting

Now you have established the common ground, it’s time to apply the matrix to individual work items. Get everyone involved in the sprint to review the user stories and provide their input.

From planning poker and t-shirt sizes to dot voting and bucket systems, you can use different user story estimation techniques depending on the nature of the project and your team’s dynamics. Take a closer look at these techniques in this post.

The goal of the planning meeting is to align team members who will work on the tasks and see how much work you can accomplish in an upcoming sprint. Getting everyone to weigh in can help account for different opinions and eliminate biases.

5. Execute the Sprint and Collect Data

If this is the first time the team works together, you won’t know how many story points you can complete within a specific timeframe. That’s ok—make your best estimation.

When you execute the sprint, collect granular data to see how much time team members spend on each work item. Then, divide the tracked time by the number of story points to calculate your team’s pace (or velocity.)

6. Use Pace To Track Progress and Inform Future Estimations

After a few sprints, you’ll find the team gravitating toward a somewhat consistent pace—this is great! Use this metric to help plan future iterations by knowing how many story points you can fit into one sprint.

You can also pull data from your time tracking tool during a sprint to calculate the team’s velocity. If the pace is off, you can identify red flags and course-correct right away to keep the project on track.

Why Use Story Points In Your Software Estimations?

It isn’t always easy for developers to make the switch from time estimates. But it’s worth the effort because using story points in the agile development process offer many benefits:

• The relative estimation method may seem more complicated at first, but after the team has nailed its pace, subsequent planning will go much faster.
• Story points account for uncertainties and risks in the development process to give you a more accurate view of the scope and minimize unpleasant surprises.
• The estimation method removes skill bias—a senior developer may take 2 hours to complete a story point while a junior team member may need 4 hours. Story points offer a consistent reference based on what needs to get done.
• Story points allow you to see how much time you need for each work item to set meaningful and realistic due dates.
• Teams can adapt and reuse story points for tasks of similar scope, effort, and complexity to streamline future planning without sacrificing accuracy.
• The team-centric method takes everyone’s perspective into account and provides a scoring system that aligns the team so you can arrive at an estimate based on the whole team’s ability.

Story Points Pitfalls To Avoid

While story points are a valuable scrum project management tool, not everyone knows how to use them properly to support the planning process. Here’s how to avoid some common pitfalls.

Don’t assign story points arbitrarily. The relative nature of story points means that each team has its own “exchange rate” when translating story points to velocity. As such, you can’t compare story points across teams.

If the effort estimations from individual team members vary widely, don’t just take the average and call it a day. Instead, discuss the discrepancies and consider different perspectives to arrive at a number everyone agrees on.

A user story that’s too large may result in inaccurate estimation. Break it down into manageable pieces so you can eat the elephant one bite at a time.

If an estimate turns out to be off, don’t sweep it under the rug! Bring it up in your sprint retrospective to identify the cause of the discrepancy. You can learn from the process, adjust your matrix, and see if you have missed some critical factors.

Lastly, don’t determine the relationships between story points and velocity after just one sprint. It takes information from a few sprints to calculate your team’s pace accurately, so track and analyze data over time to refine your agile estimation.

Achieve Accurate Software Estimates With Story Points

Accurate estimation using story points boils down to having the ability to collect, access, and analyze granular data to understand how your team works.

A robust time tracking tool can help you associate the time each developer spent with individual work items to understand how the complexity and uncertainties of a task affect the amount of effort required. You can use the insights to help improve subsequent estimates.

7pace Timetracker is designed specifically for the agile development process. It helps teams track time where they work (i.e., on Azure DevOps or Github) and associates the hours with individual work items. You can then apply the data to determine your team’s pace and improve future estimations with story points.

Sign up for 7pace to collect the data you need for better software estimations.