Top 6 Scrum Estimation Techniques: A Complete Overview

Estimation, the very word in itself seems quite heavy, and it does feel substantial when you are asked to estimate unfamiliar items to some degree. One of the key advantages of adopting Agile is the capability of the team to estimate work effectually. Earlier when the teams were on waterfall, they used bottom-up approach with the smallest tasks at the bottom, in order to determine the cost of each feature.

On the contrary, Agile uses two estimation techniques, such as Top-Down Estimation and Relative Sizing, since we are not concerned about the detail of the tasks. Instead, we are much more interested in swift estimates of higher-level features or even epics. These Scrum Estimation Techniques are an integral part of many types of Agile methodologies, allowing teams to remain flexible while planning with accuracy. 

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What is Estimation?

“Estimation (or estimating) is the process of finding an estimate, or approximation, which is a value usable for some purpose even if input data may be incomplete, uncertain, or unstable. The value is nonetheless usable because it is derived from the best information available.” – Wiki.

As a part of Scrum process, the development team sits together in the planning session, pulls out the items as per priority from the backlog and associates an estimate to the PBI (Product backlog item). The size of the PBI is projected in terms of User Story Points.

Estimation is necessary for any planning practice. Get to know more about Agile vs Traditional Project Management.

Why to Estimate?

In my last session on estimate, I asked why we estimate, and the answers I received were:

• To get people liable for their work
• To predict the finish line
• To fill up the sprint with work
• To measure teams’ progress, we do an estimation.

And lastly, because that’s what we do in estimation in Agile, right? (Partially true)

But in true sense, estimates are required to plan work and time. It even helps the team to measure success in terms of numbers. Surprised! Yes, they do project success, through velocity, sustained velocity figures, up rise in the numbers. Estimates can be turned into release plans too!! Even they help you make weighty decisions.

“Estimating isn’t about estimating at all. Estimating is about creating a shared understanding of the requirements and a shared understanding of the solution. When teams have problems estimating, it is almost never an estimating problem, it is a shared understanding problem” - MIKE COTTMEYER

How to Estimate?

Estimating work items for new teams get quite difficult as the teams are unfamiliar with the requirements and require solution but over time, as team members get used to the product, they develop a progressively precise sense of how they are going to approach stories and how much effort each user story will take to complete.

As human beings, we are typically good at relatively estimating the items, e.g., we cannot predict at first instance if the Earth is heavier than Mercury, because heaviness is dependent on density which is not a visual thing to determine but we can confidently say that the circumference of Earth is bigger than that of Mercury as size can be determined easily by visualization. Hence, we can relatively estimate the size of earth in comparison to the Mercury just by looking at it. Let’s consider the image below which shows how the product can be estimated.

Also, check out 5 whys root cause analysis process used by Agile teams to identify the main cause of a problem.

Teams across the world use a variety of methods to estimate their work. You just have to find the right way or the way most suitable for your team’s needs. There is no fixed rule for estimation and luckily, we live on a planet where options are not scarce, and this applies to estimation as well.

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Types of Scrum Estimation Techniques

S.no	Techniques
1	Planning Poker
2	T-Shirt Sizes
3	The Bucket System
4	Large/Uncertain/Small
5	Dot Voting
6	Three-Point Method

Accordingly, we will now be discussing some of the methods which are usually used with the teams. Start off with the one which is being widely used across the globe:

1) Planning Poker

Planning Poker is an Agile estimating and planning technique that is based on an agreement from the team on the points being assigned to the PBI. It makes sure that everyone participates and that every individual in the team shares his/her opinion.

To start with, each team member is given a set of cards with numbers on them. The numbers are usually in the Fibonacci sequence: 0, 1, 2, 3, 5, 8, 13, and 21. The product owner reads out the story, after which everybody in the team is asked to hold up the card showing the level of effort that they believe this story holds.

Once all the votes are in, the team members with the lowest and highest estimates explain why they choose their numbers. The team then re-estimates as per the new perceptions discussed. Once the agreement has been reached that score is recorded with the story to which it relates, the team is good to proceed.

2) T-Shirt Sizes

This is a seamless technique for estimating a huge backlog of relatively large items. T-shirt sizing is based on binning- a technique for accurately grouping together items of similar size. The bins are typically allocated labels matching those commonly used with T-shirt sizes: extra small, small, medium, large, extra-large, etc.

The primary advantage of t-shirt sizes is the ease of getting started. T-shirt sizes can be a great way of becoming familiar with relative estimating. So, you can start with it if your team finds that easier. It is also one of the more accessible Scrum Estimation Techniques, especially for teams new to Agile.

3) The Bucket System

The Bucket System is an estimation technique that is faster than the planning poker method. It combines group discussion with speed and scale.

This method is done by categorizing story cards into “buckets” that are labeled with different estimation values like 1, 2, 3, 5, 8, 13, etc. Each team member suggests the categorization of each story based on the effort required. Stories are placed into different buckets by a consensus arrived at through discussions.

This method is well-suited for remote teams dealing with large backlogs. The bucket system balances speed without compromising input from the entire group. Teams are able to estimate a large number of stories while allowing for different perspectives on complex items.

Since this isn’t tied to strict rules like the planning poker method, accuracy is maintained without consuming a lot of time. 

4) Large/Uncertain/Small

The large/uncertain/small method simplifies estimation by categorizing backlogs into three buckets based on the effort required to clear the item. As one of the widely used Scrum Estimation Techniques, this method is applied early in the backlog grooming stage where detailed story sizing is premature.

These are the three buckets used for categorization in this technique:

• Items that are complex and span multiple sprints are categorized as Large
• Straightforward items that can be completed within a single sprint are categorized as Small

Stories that lack clarity or scope and require further refinement before estimation are categorized as Uncertain.

This approach focuses on speed and clarity, which helps teams to focus on high-level prioritization before moving onto granular estimates of the time required for each item. 

5) Dot Voting

Dot voting is an estimation method that takes input from each member and prioritization is done by reaching a consensus. 

Each member is given a limited number of dots (votes) and is asked to assign them to user stories based on the amount of effort needed. The story with the highest number of votes is prioritized for discussion and deeper sizing. 

This method is a good way to tackle a small amount of backlog items. It is a quick and visual method to prioritize backlog items. Despite not being a replacement for numerical estimation, dot voting helps the sprint planning prep. The visual consensus accelerates decision-making and gets everyone on the same page. 

6) Three-Point Method 

The Three-Point method for estimation takes a probability-based approach based on time taken to arrive at three scenarios: 

• Optimistic (O): This is the best-case scenario assuming everything goes as planned 
• Pessimistic (P): This is the worst-case scenario where unexpected problems arise 
• Most Likely (M): Defines the most likely scenario where most things go as planned while dealing with some potential issues 

These data points are used in a formula - (O + 4M + P) / 6. This formula provides an average giving more weight to the most likely scenario as it is the most reliable one. 

This method creates a realistic estimate by considering a wide range of possibilities. It also facilitates risk planning as potential risks are considered when arriving at these data points. 

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Conclusion

There are many techniques that the teams use globally to estimate their work, here, we have discussed the top five, but there is no consensus over which method is best. Each method, including Scrum Estimation Techniques, has its own advantages and can be customized based on the team’s functioning pattern. Like there is no common medicine that applies to all ailments, in the same way, there is no single method that applies to all for estimating.

A facilitator must understand that estimation takes time to sink in with the teams, and it should not be forced upon them. Go for the one that best suits your team’s needs and, simultaneously, can provide optimum results. Opting for Professional Scrum Master training will help you gain mastery of Scrum and the role of Scrum Master.