How to Estimate in Kanban & Agile Kanban Metrics

Introduction

Stemming from agile methodology, kanban is a popular method for organizing priorities and aligning product teams across various industries.

While kanban is known for its board, learning how to measure progress and estimate goals in kanban is part of any successful product manager’s strategy.

In this article, we will go over how to estimate in kanban and practical calculations you can use when developing products in kanban methodology.

How to Estimate in Kanban

Before we dive into understanding how to estimate in kanban, let’s start by understanding what an estimate is in kanban.

An estimate in kanban refers to how we understand how much work is required to complete a user story.

It should be noted that estimates are not fixed, but rather flexible. You can produce more or less than what was originally estimated depending on the circumstances.

The reason we estimate in kanban is that we want to know how much work is in the system and make sure we have enough capacity for it. This way we can prioritize the tasks and come up with a release plan for the customers.

The steps to estimate in kanban are:

  • Determine the question or statement that you want to estimate in kanban which your team understands clearly.
  • Create a visual representation of this estimation using cards.
  • Create a backlog and list all the tasks.
  • Sort the tasks by criticality, start with high priority ones first to create a release plan.
  • Estimate how much time each task will take according to what’s needed (e.g., design, coding, testing).

Some of the challenges while estimating in Kanban are about asking the following questions:

  • How do you account for different skill levels and team sizes? 
  • What about risk factors that may delay the entire project? 
  • How do you decide when a task is complete? 
  • How will other tasks be impacted by this one being completed or not completing it on time?

To be able to answer these questions, it is important to be able to measure first. That’s why there are some agile kanban metrics that can be additionally used to estimate in kanban. 

How to Measure Kanban Performance

Now that we examined how to estimate in kanban, it’s important to know how to measure kanban performance.

You need to know how to measure kanban performance because it can help you make adjustments to your process or team.

Kanban performance can be measured using the agile kanban metrics that we further explain in this article.

Is There a Primary Metric in Kanban?

The answer to that question is, it depends.

It’s important to know that there is no “one-size-fits-all” metric. 

Each measurement of kanban performance can be tailored and used depending on the context of your organization, so you should think about which metrics are more relevant for your particular business needs before committing to one type of measurement.

What Are Some Agile Kanban Metrics? 

Agile kanban metrics are used for tracking the team’s progress and insights into how efficiently work is being completed. 

The metrics are collected during the course of a workflow to evaluate performance at various points in time, rather than evaluating productivity over an entire project cycle.

Agile kanban metrics are mostly used by managers, scrum masters, and teams. Managers may use metrics to track what’s going on with their team as well as assess the performance of individual members.

Scrum masters are responsible for tracking how much work a team is completing each day or week so that they can help facilitate better planning in the future while also holding individuals accountable for what they’re doing.

Of course, the scrum master comes into play only when kanban is used as a combination with scrum in cases such as scrumban and kanplan.

Importance of Agile Kanban Metrics

Agile kanban metrics are important because they help measure the team’s progress. They also provide insights for how to work more efficiently and may reveal potential bottlenecks in the workflow or tasks that are taking too long.

At each point in time, agile kanban metrics can be used as a benchmark against which future performance can be measured. This is especially useful if some changes have been implemented recently.

The most commonly used agile kanban metrics are  the following:

  • Lead Time or Average Lead Time to complete a work unit.
  • Throughput – the number of units passing through a process in a specific period, usually defined by hours, days, weeks.
  • Work in Progress (WIP) – the number of tasks or work items your team has on their plates at any given point in time.

What Is Lead Time in Kanban?

Lead time in kanban refers to the time it takes for a task to move from one stage of production to the next.  It refers to the time that elapses between an item being created and delivered by a company or individual. 

Lead time in kanban is the amount of time taken from the moment a request is made to the moment when the task or product is released

In other words, lead time in kanban is the waiting period for the client during which their request is being fulfilled. Kanban models use the lead time to measure customer satisfaction

Lead time in kanban is a very important metric in kanban because it determines what the team can work on next and what will be started when.

One of the ways to keep lead time low is by limiting how many tasks are in progress at one time with a kanban system, which means that there’s less chance for bottlenecks or task failures due to resource constraints like idle workers or equipment.

We use lead time in kanban to determine how long it will take to complete a task. For example, if you have five tasks and each one takes two hours for the team to finish them then your total lead time would be ten hours (the sum of all tasks).

To calculate the lead time in kanban, simply subtract the time when the order is received from the time the order is delivered. 

Lead time = Order delivered – Order received

For instance, if you received the order on July 5th, 2021, and delivered the order on July 12th, 2021 then lead time equals 12 minus 5, which is 7. Hence, the lead time is 7 days. 

Average Lead Time Measured in a Kanban System

What is the average lead time measured in a kanban system? 

Lead time measures the amount of time that a task takes the moment the team starts working on it. Lead times are calculated by summing up all the tasks’ completion times and dividing them by their total number. 

To measure average lead time in kanban, use the following formula.

Average lead time = Total lead – Time / Number of completed tasks

Average lead time in kanban is an important metric because it can be a useful indicator of how quickly your team is completing work.

The average lead time will give you an idea about the average amount of time it takes for tasks to complete, and thus help you understand, how long do processes take in general and the average wait experienced by customers or users before they receive their request.

If you are a product manager or team lead, average lead time in kanban is an important metric to know because it will allow you to easily spot any potential issues and do something about them accordingly, like adding resources and switching processes.

Lead times come in a variety of forms, with the average lead time being just one metric that can be measured and tracked on an agile team’s kanban board or software tool.

The key difference between average lead time and lead time in kanban is that average lead time is calculated in days elapsed from when work begins. Lead time, on the other hand, refers to how many days a task should take if it were being completed at an average pace.

Some of the limitations of average lead time are that it doesn’t take into account what the team is working on or what they are trying to achieve, which means that data can be distorted by variability in work.

Another limitation of using average lead time as a metric is that it’s possible for one project to have an abnormally long completion period and cause delays at other projects with shorter deadlines.

What Is the Kanban Lead Time Calculation?

The kanban lead time calculation is the average amount of time it takes to move a card across the board.

This can be calculated by adding up all the “lead times” for each column in your kanban board and dividing that number by the total cards (or tasks) completed on that board’s columns. This will give you how much lead time is required before moving on to the next part of the kanban board.

What Is Cycle Time in Kanban? 

Cycle time in kanban is a metric that measures the time a task takes to pass through the kanban workflow. Cycle time is calculated from the moment your team starts working on the task till the task is successfully completed by your team. It doesn’t account for the order and delivery of the task. 

Make sure that you don’t confuse lead time and cycle time in kanban. In contrast with lead time, cycle time solely measures the production rate during the developmental process. In other words, it calculates the time taken by a task in the workflow of kanban. 

Cycle time is calculated through the internal perspective in order to improve productivity. However, lead time is calculated from the client’s perspective in order to improve customer satisfaction. 

The formula to calculate cycle time is as follows: 

Cycle time = Net Production time / Number of units produced in the Net production time. 

What Is the Difference Between Lead Time and Cycle Time in Kanban?

The difference between lead time and cycle time in kanban is that lead time is the average amount of time it takes for a task to move across one row in your kanban board. 

Cycle time, on the other hand, is how long tasks take from start to finish and can be calculated by adding up all the “lead times” for each column in your kanban board and dividing that number by the total cards.

What Is Throughput in Kanban? 

In contrast with cycle time, throughput measures work items that have been completed in a certain period of time. Remember that, throughput only includes completed tasks. Hence, it doesn’t include the tasks that are still in progress. 

Throughput helps to determine the capacity of your team to be able to deliver a certain amount of completed tasks in a fixed period of time. 

To give you an example of throughput, consider a team that delivers items 4, 6, 7, and 7 in four respective weeks. Hence, without even taking other factors into account, we can understand that the average throughput would be 6 items per week. This means that the team can complete approximately 6 deliverable items every week. 

Over a period of time, team performance can be tracked through a throughput histogram. Bear in mind that if your throughput increases or stays the same over a period of time, it indicates that your team is functioning efficiently.

However, if it decreases, it indicates the occurrence of a scope creep or hindrance in productivity.

What Are Some Kanban Throughput Metrics?

Some kanban throughput metrics include:

  • The average lead time for all tasks in the “In Progress” column of your kanban board. 
  • Cycle times, or how long each task takes.

These metrics can help you to identify which tasks need more time and effort to be done.

What Is the Kanban Throughput Calculation?

The kanban throughput calculation is the number of cards that pass through a kanban board in the time period you specify.

It is calculated by adding up all the “lead times” for each column and dividing that total by the total cards on your kanban board.

What Is Work in Progress in Kanban? 

Work in progress is a section on the kanban board where all the work that is currently undertaken by the team but not completed is listed. It is important to keep the tasks under this section as low as possible. 

The lower number of items in the work in progress section assures that there is no chance of multitasking as divided attention, and all the team members can collectively or individually focus on one particular task at hand. 

Your optimum number of tasks in this section can be determined by the number of members in your team. It is recommended to have a limit set on the number of team members you can have. This way, everyone can focus on one task at a time. 

Conclusion

Using these kanban metrics and calculations only helps you accomplish your goals as a product manager. Chisel’s platform makes it easy for you to have an organized kanban so you can engage in such calculations.

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