What are Story Points and How to Estimate them?

Backlogs can be daunting and can seriously thwart product management if dealt with unsystematically. 

But let’s all face it! There is no denying that they are inevitable, and even the most organized teams tend to have them now and then. 

Now you must be thinking, okay, if we can’t elude backlogs, how to manage them efficiently! 

The concern is legitimate, and what would be the immediate modus operandi in such cases? To estimate, right! But then again, estimation can be fiddly at times, as it takes a slew of factors into account. 

Don’t worry!

There is an effective way to do estimation and tackle backlogs, and it is by way of ‘Story points’

What Are Story Points?

Let’s start with the definition to get the basics clear. 

Story points are helpful for estimating and prioritizing backlog items, and they are a unitless measure of effort applied in Agile teams.

Let’s unpack this definition by looking at it clause-wise:

What do Story points stand for?

Story points measure effort applied in Agile teams.

How are Story Points applied?

Story points give an upper limit to how much work you can do over a fixed period, which helps in the release planning process. It also provides an easy way to break down larger stories into smaller ones.

When are Story Points applied?

Story points are used to estimate and prioritize backlog items.

Why are Story Points Used?

Story points help in the release planning process breakdown of more significant stories into smaller ones.

What Do the Story Points Include?

Now, since we have already understood the definition of story points, let’s understand what goes into it!

The total amount of tasks that you need to complete:

Story points represent how much work is needed to complete a task. Story points represent task effort.

The elements of difficulty attached to the task:

Story points represent the complexity of the task involved. Story points are relative. They denote how difficult a task is amongst other tasks in the same project. Their scales are useful for comparing estimates between team members, across teams, and against historical data within an organization.

The duration required to finish the task:

Story points represent effort applied in Agile teams.

Uncertainty or risk, if any:

Story points represent a way to account for estimation uncertainty. They are also sometimes useful when a significant risk is involved in completing a task.

Story Points Fibonacci

A credulous estimation can immensely help in product management and one of the scales to do such estimation is ‘Fibonacci.’

Fibonacci scale is useful in story point estimation in agile teams. It helps them set more accurate estimates.

Wait up, not just that!

This scale helps estimate story points and you can apply it to any point system for estimation. 

This feature eases the overall process of story points or any other kind of estimation for teams, as they have a ready-made template to work upon.

Now, let’s move to understand the Fibonacci scale and various ways Story Points can be estimated using it.

What Is Fibonacci:

The Fibonacci sequence is a numerical sequence wherein each number is the sum of the previous two numbers. 

It starts with 0, 1, and its successive terms occur by adding the previous two digits to get the next one. For instance, if we list down the Fibonacci series till 21, it will look like this: 0, 1, 1, 2, 3, 5, 8, 13.

The Story Points Fibonacci scale assigns numbers to Story points: Story point = Story Size – Story Complexity.

0 = 0-1 Story Points

1 = 2 Story Points

2 = 4 Story Points

3 = 8 Story Points

5 = 13 Story Points

8 = 21 Story Points

13 = 34 Story Points

Another way to articulate it would be to estimate Story points using the Fibonacci scale. You must first decide how many Story Points you need to achieve. 

You will then take the sum of the next two Fibonacci numbers, and this number is your Story Points estimate.

For example, if you want to estimate Story Points for a task that needs 2 Story points, add 13 and 21 Story Pints together (sum = 34)

Story Point Estimate:

Until this blog, we can safely deduce that you have a rough idea about the Story points. 

As we mentioned earlier, the whole purpose of story points is to prevent you from manically rummaging through backlogs and provide a cohesive, more efficient way to estimate.

Now let’s explore the following;

When to Do Story Point Estimation?

One of the signs that you are ready to do Story Point estimation is when you sufficiently groom the backlog. But this begs another question: What does story point grooming mean? 

Story point grooming is like the pre-actualization of Story Point estimation.

The term may sound too formal; it simply means that you are familiarizing yourself with your backlog and understanding what exactly needs to be done for story points to be estimated.

What is a Story Point Estimation?

Story point estimation is an agile technique employed to help teams improve their estimation skills, speed up delivery, and quickly gauge the difficulty levels associated with user stories. 

Story point estimation is done by assigning points to each user story you identified in the backlog.

Story point estimation is a way to compare story points between different teams and better understand its effort to complete a specific user story.

These points are in a continuum from 1 to X, where the values closer to 1 indicate smaller and simpler increments while those closer to X signify bigger and more complex increments.

The Story point estimation uses those values as a benchmark to better understand the actual time, effort, and complexity it will take for you to implement each user story. 

Story Point Estimation: Some Key Issues and Ways To Property Tackle Them.

Fear of Commitment:

The biggest threat to any estimation is commitment. People tend to be afraid of committing themselves, and often it comes in the form of under-estimation. 

So, how do we tackle that? The answer lies in standardizing your story point estimation process. If you are not committed to the estimates at the end of the day, you are not doing it right.

The Wrong Estimates:

People may often get carried away while underestimating the actual time required to complete a story point. 

This approach is usually because they lack experience in estimation and try to compress their normal work days into one or two hours. So if you feel yourself doing the same, stop. Stop it right now!

The Not-Invented-Here Syndrome: 

People tend to be too opinionated when encountering a new technique like story point estimation, and this outlook often leads them to trivialize or even ignore its significance and benefits. 

So don’t fall into this trap where you think estimating story points doesn’t make sense. It does!

Story Points to Hour 

Understanding the story points to our concept can be a tough feat. However, not to worry, we will simplify it for you.

What exactly do you need to establish when estimating something in story points? The answer is the user story’s effort, where Story Points-to-Hour comes into the picture.

To begin with, one must understand that the concept of hours refers to the number of hours it will take a team to complete a specific user story or increment of work, and that is all there is to it.

You can work it out by adding up the estimate for each task that you need to do to complete the Story.

Tasks marked on a story map depict the work it will take to complete the user story and thus, give you an idea about how long it might take your team to accomplish it.

You can estimate the total number of hours by multiplying the number of tasks with their estimated time taken for completion.

However, it is difficult to translate story points into hours if the team is new to Story point estimation. 

To ensure that there is no opportunity for confusion, always carry out thorough training sessions with your team so that they are equipped with better time management skills and can estimate tasks more precisely. 

Why Use Story Points Instead of Hours?

Companies choose story points over hours in recent times. This occurrence is solely because it is difficult to ascertain or predict time.

There are the following reasons why Story points are perceived advantageous over hours.

More Accurate Estimation

It is challenging to predict hours due to infinite possibilities of factors that can delay the time factor. Story points try to quantify the impact of each factor instead of considering it as one whole, which can take away from the accuracy of estimation.

Easier Calculation

Point systems are easier to calculate than hours, making it easier to estimate the same in the upcoming sprints.

Better Predictability

The ability of Story points to give a clear picture of what lies ahead is beneficial in making decisions before starting any project or product development. The predictability is rather tricky in the case of hours.

Better Communication

Story points are also helpful in a better communication process, indicating the amount of work involved. On the other hand, determining hours can be ludicrous, as it is highly subjective and involves multiple factors.

What are User Story and User Story Points?

Now let’s shed some light on the User story.

Here are some examples of user stories you can have access to.

• As a parent, I want my kid to know their school schedule via the app on my phone to avoid missing out.

• As an auditor, I would like to have an option in the accounting software to make it easier to do my work.

• As a patient, I wish to view my complete medical history through an app to simplify it for me to collect information when required.

• As an auditor, I would like to have an option in the accounting software to make it easier to do my work.

Some of the critical elements of user stories are : 

• It should be specific and concise.

• It should contain the business value

• It should not require implementation by the development team.

• It does not necessarily include the detailed design or implementation instructions, but it usually describes the feature’s results.

• The acceptance criteria must fit within the story itself.

• A user story reads in the form of “As a [role], I want [feature] so that [benefit].”

What are User Story Points?

User story points are an estimation technique used by Agile teams to estimate the effort required to complete user stories.

It is a unit of measurement associated with a story, which gives a relative idea about the total time a task might take for completion based on its size and complexity.

Here is what you need to know about User Story Points:

• It is a numbering system for prioritizing and estimating product backlog items 

• A point value is assigned based on the difficulty of delivering a specific requirement.

• Story points are helpful to estimate effort or complexity.

• They help the team order and sequence story estimates for a product backlog.

• A unit of measure for relative size and difficulty of user stories and other requirements and how much work is required to implement them.

• Story Points are not the same as hours. Story points are useful to indicate the estimated size of a requirement, whereas time is helpful to record the actual amount of time spent working on the requirement.

Story Points Agile

Story points are the Agile product management metric used to estimate complexity in implementing the User story. 

Just for better clarity, let’s dive into a little history aspect of it. 

Shall we! 

Like many methods, story points have a rich history. When story points became popular with the advent of agile software development, they were useful as a replacement for estimating in hours or days. 

Their popularity grew out of a desire to improve on less agile efforts like waterfall development.

Below are two crucial pointers which you should know about agile story points. 

Quotes are not Estimations.

Many people use story points because they believe their estimation is more accurate than time units, and that’s simply not true. 

If you ask someone how long something will take and then multiply by their estimate factor, the result will be (on average) +/- 30% of the time required to complete an iteration (assuming story point estimation is done correctly – which nearly never happens). 

So story points are not always accurate in agile. 

Velocity Is More Accurate Than Story Points

Velocity is even more accurate than story points because it is measured instead of estimated. 

How To Calculate Story Points in Agile?

Now that you know about Story points in Agile, let’s look at ‘How you can efficiently calculate them.

The story points calculation is pretty straightforward. 

• For each story, the team’s velocity (measured using story point counting story points) will be converted into a story size. 

• Then that story size will be divided by the time required to complete an iteration (assuming we choose iterations as our unit of measure).

• Story Points = Story Size / Iteration Time

For example: 

So let’s say we have five developers, and we’re going to use two-week iterations, which means our iteration time is 14 days. 

Let’s also assume that these same five people completed four stories in our last iteration with story point values of one, two, three, and four, respectively. 

We’d now have a story point value for those stories because they were completed during this iteration. So story points are story size/iteration time.

1 story point = 1 story size / 14 story points/iteration

2 story points = 2 story size / 28 days

3 story points = 3 story size / 42 days

And so on. So the total story value for our 4 completed stories in this iteration is 18 (4 + 2 + 3 + 4). 

If we add up the total story values of alliterations, we have a cumulative team velocity that tells us how many stories can be completed during each future iteration. 

The first thing we need to do is define a story point as the length of a story (i.e., using story points will only work if we use story sizes). 

So what size should our stories be? Should they all be one story point, or should each have its story point value? We could leave the story point values up to a democratic process. 

Everyone votes on their favorite number. But story point values are not democratic, and they should be determined by empirical testing and measurement.

Agile Story Points to Hours

Finding a correlation between story points and hours is one of the most challenging problems in software estimation. 

Why? Because business wants to know when they will get their desired features, we want to be accurate in our estimates to do our best work.

In Agile, story points are a measure of estimation equal to the amount of work required to implement a given feature. 

Generally, these units of estimation do not equate to hours for several reasons:

• The first reason is that our estimation is helpful to prioritize and groom backlogs.

• Secondly, because the numbers we use aren’t accurate measures of time, we use these estimation units to facilitate discussions about the complexity and effort required to address a given problem using different solutions.

How to Convert Agile Story Points to Hours?

Agile story points stem from the Fibonacci sequence. Did you know that? While it’s true, story points do not originate from hours. 

Hence, there is no way to estimate a story in hours, but if we can derive a correlation, then a conversion between story points and hours would be helpful in planning and forecasting efforts.

How do you find this correlation?

There are two basic statistical approaches to find the correlation. 

The first type has its basis in some assumptions about the variability of story points or hours that don’t necessarily hold. 

The second type is the best approach, but very little guidance is available.

Type 1 Approach: Estimating a Regression Equation

This approach to converting story points to hours has its basis on a “regression” or a “correlation.” 

In regression, you have one variable with units of measurement A and another with units of measurement B. The regression aims to estimate values for B given values for A. 

For example, if I know the size (in the number of pages) of a book, I can count the number of words.

The most common regression is linear regression. 

But this does not mean that your variables are straight lines on a graph, and instead, it means that you have seen some data or values where A correlates with B, and then you look at other data to see if your correlation holds.

Suppose we have a linear relationship between story points and hours. 

In that case, we can essentially look at past data about completed work or estimates to determine the number of hours required for a set of story points.

However, there are some issues with this approach:

• The size/amount of work is not always consistent over time
• You don’t have many historical data points
• The resulting equation will not be very accurate if you don’t have a large sample size

In addition to the regression analysis, another approach looks at the distribution of story points or hours.

Type 2 Approach:

You can also look at this distribution and determine a reasonable distribution curve. Once you have that, the standard deviation of points or hours determines the accuracy of your estimation.

Jira Story Points

Jira story points are increments of work you can complete between one planning poker session and the next. 

A story point is about the effort required to implement a “chunk” of functionality – it does not relate to time or any other measure of effort. 

Generally speaking, if two teams use Jira story points in their planning poker sessions, then there should be a one-to-one mapping between them and planning poker sessions.

But what does the Jira story point mean in terms of hours? You must be wondering!

It means that if you’re working on Agile, then Jira estimation is helpful for prioritization rather than accurate measurement. 

Jira is applicable primarily to communicate the complexity/effort involved in a given task. 

It is helpful to derive velocity (points completed per iteration). Jira story points are not converted to hours since they are unitless.

The number of story points you can complete during an iteration depends on your team’s velocity and the number of girls available in the sprint. The story points to hours conversion is just for estimation purposes.

Scrum Story Points

Scrum story points are:

Scrum story points are a subset of Jira story points. Generally, scrum story points are helpful to estimate a given backlog item’s size and effort involved during its prioritization meeting. 

Story points do not have a time or duration associated with them; hence you cannot directly convert the story points to hours.

Following are the Scrum story points best practices, 

• Scrum teams should be working in 2-week sprints. 

• Each scrum story should consist of a minimum set of user stories (features) required to meet the team’s definition of done. 

Now here is a problem, 

It’s complicated for scrum teams to accurately estimate their Jira velocity longer than one sprint in advance (and sometimes scrums teams can’t even do it accurately over just one sprint). 

While scrums should not be using Jira for estimation purposes, there should still be some value associated with them – since stories that are part of the top priority features requested by customers should have a higher priority over other accounts. 

This approach means that a scrum story point should at least be a measure of customer value – or a relative estimate of how important a scrum story is in comparison to other such stories.

Real-time is a pressing issue, right! 

So what to do? Don’t worry about it. There is a way!

Scrums are typically estimated in story points (the only unit of measure used for scrum estimation). 

Our top two suggestions to make the estimation more efficient: 

Abandon Scrum Estimates and Replace Them with Jira Hours. 

• This approach means that one should deliver each user story within a given scrum via one sprint, which may change how some teams approach their work.

• It also means that scrums can now accurately estimate how much work they can accomplish at any time based on their current backlog instead of having to rely on scrum estimation (typically completed at the beginning of scrum sprints).

• This idea does not require scrums to abandon the usual sprints. Scrums can still work within sprints and can even continue using estimates for micro-estimation purposes – as long as they have a well-defined set of user stories that makes up their top priority backlogs. 

Make Scrum Story Point Values More Useful

Another efficient way is for scrum teams to start utilizing what they already measure. 

Scrum teams already measure points in terms of hours. 

Scrum stories should, therefore, always take the same amount of time to complete. This feature is important because there won’t be issues with team velocity. 

This way, the number of scrum hours it takes a team to accomplish something will always remain constant, providing an accurate value for future estimations.

Scrum Story Points Estimate

Now let’s understand how to estimate scrum stories. (Edit)

• As scrum stories finish during sprints, teams can easily estimate their scrum velocity. 
• Scrum velocity is simply the sum of all completed scrums divided by the days to accomplish them. 

For example, 

If a scrum team completes five scrums in 3 days, they have a nine-story-point Jira velocity for that particular sprint. 

This fact also means that if a scrum team has completed ten user stories during their last sprint, they would now know how long it will take them to complete an additional ten stories at this same completion rate (which may incur minor changes based on different variables). 

Another interesting fact here, 

Since Jiras are estimated in terms of user stories, this scrum velocity can also be helpful for estimating Jira velocity.

Here are some points to remember, 

• While scrum velocity only uses scrum for estimation purposes, it remains a relative value indicating the team’s ability to complete work in a sprint. Which is why scrum’s story points should stay an accurate measure of customer value (instead of being used for micro-estimation purposes).

• This fact also means that user stories will always be estimated concerning how much more value they provide than other user stories within a given scrum, regardless of their size or complexity. This unique estimation method makes scrums so effective compared to waterfall development.

• User stories in scrum estimates have values with accurate meanings and consequences.

• The only exception is when you are working on epics – which should be split into smaller pieces during sprint planning before estimation begins. At this point, scrum teams would typically start thinking in scrum user stories instead of scrum story points.

How Many Story Points per Sprint

The scrum team decides how many story points they can complete in a given iteration. 

The scrum master generally recommends this based on what the team has completed previously and what he expects the team to accomplish during the upcoming sprint.

Story Points in Kanban

Let’s throw some light on how story points work in Kanban.

Story points in Kanban are generally helpful as a relative estimation technique. This kanban technique is called Visual Kanban and LeanKit developed it.

The team members give each task story points based on their previous experience with similar studies.

Story Points in Kanban Estimate

The kanban team decides how many story points a given backlog item should be estimated based on experience. 

Here the teams do not adhere to the Fibonacci sequence like scrum teams because, as we mentioned earlier, kanban story points are a relative estimation technique and don’t have iterations or sprints.

When Kanban story points are combined with Kanban boards, they can determine the importance of every task on the roadmap.

Conclusion

Story points estimation plays a pivotal role in almost all product management and development processes. That is why it is fundamental for the teams to understand concepts thoroughly. 

This blog has covered all of the nuances relating to story points. The guide will help to gain knowledge and make an informed choice.