In a scrum project there’s a Release Plan for the project, a Product Backlog and a Sprint Backlog.  Progress is tracked at each level.  The Release Plan is very high level and estimates are based on the team velocity.  The Product Backlog begins with coarse-grained high level estimates and progresses towards Story Points for the higher priority items.  Eventually those items will be split into tasks with ideal hours in the Sprint Backlog.

A backlog with more than 150 items starts to become unmanageable, so you can split the backlog into different levels with different estimation units.  T-shirt sizing for epics/themes and Story Points for stories.  Each story maps back to an epic/theme.  T-shirt sizing can be used to initially assign a complexity estimate.  Each item is given a t-shirt size of Small, Medium, Large or ‘Too Large to estimate’.  This helps to sort them and identify which ones need more research before estimation.

At the next level, the items can be assigned Story Points.  A Story Point is a measure of size/effort/complexity.  It’s a relative measure.  Story Points are used for long term planning and work well with big numbers… the individual estimates average out to give overall accurate estimates.  Many teams use the Fibonacci sequence (0, 1, 2, 3, 5, 8, 13).  This helps to avoid estimates being too precise and generates better discussions.  Anything higher than 13 is essentially 100 SP and needs to be broken down or reasearched more.

A common method for assigning story points is Planning Poker.  This is a well-known estimation method that highlights when more discussion is required to define a piece of work.  Each team member has a set of cards with the different story points.  After a story has been discussed, each person chooses a card.  The team reveals their cards at the same time, promoting honesty as each team member is estimating without being influenced by the group.  The people who gave the highest and the lowest SP explain their reasoning and the team re-estimates on the basis of that discussion.  If 3 rounds take place without consensus then more research is required, or the majority can be used.

Story Points are used for this estmation as it is a relative measure that can’t be misinterpreted.  Using units involving days or hours encourages others to assume an accuracy that may not be there.  People tend to be overconfident when estimating, so it’s better not to apply averaging but to use a range that you can be reasonably confident in.  The Story Points will be used to help the team judge how much work can be done in a Sprint and let the Product Owner estimate whether deadlines will be reached.