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Real-Life Case Study: Issuing User Story Points and Earned Value Management (EVM)

Real-Life Case Study: Issuing User Story Points and Earned Value Management (EVM)

In the dynamic world of project management, accurate tracking and measurement of progress are crucial for success. Two techniques that have gained prominence in Agile and project management circles are User Story Points and Earned Value Management (EVM). This blog delves into a real-life case study where a technology company effectively utilised these methodologies to enhance project delivery and stakeholder satisfaction.

The Context

Our case study revolves around a mid-sized Australian technology company, TechSolutions, specialising in custom software development. TechSolutions undertook a project to develop a new Customer Relationship Management (CRM) system for a client in the financial sector. Given the complexity and high expectations, the project team decided to implement Agile methodologies, specifically focusing on User Story Points for effort estimation and Earned Value Management (EVM) for tracking project performance.

User Story Points: Setting the Stage

User Story Points are a popular Agile estimation technique used to gauge the effort required to complete a user story. Instead of estimating in hours, the team assigns points based on the complexity, risk, and effort.

  1. Initial Estimation Workshop: The project kicked off with a detailed workshop where the team and the product owner collaborated to define and estimate user stories. Using techniques like Planning Poker, the team discussed each user story and reached a consensus on the story points.
  2. Relative Estimation: The team used a baseline story (assigned 1 point) to compare and estimate other stories. For example, a story deemed twice as complex as the baseline was given 2 points, and so on.
  3. Backlog Prioritisation: The product owner prioritised the backlog based on business value, and the team broke down the stories into manageable sprints.

Earned Value Management: Tracking Progress

Earned Value Management (EVM) is a project management technique for measuring project performance and progress in an objective manner. EVM integrates project scope, schedule, and cost to provide a comprehensive picture.

  1. Baseline Plan: At the start, the project manager created a baseline plan, detailing the scope, schedule, and budget. Each user story point was assigned a monetary value based on the estimated cost to complete.
  2. Tracking Metrics: The team tracked three key metrics:
  • Planned Value (PV): The budgeted cost for the work scheduled to be completed by a certain date.
  • Earned Value (EV): The budgeted cost of the work actually completed by the same date.
  • Actual Cost (AC): The actual cost incurred for the work completed by the same date.

Integration and Execution

  1. Sprint Execution: The project was divided into two-week sprints. At the end of each sprint, the team reviewed completed user stories and calculated the Earned Value (EV) based on the story points completed.
  2. EVM Analysis: Using the EVM metrics, the project manager performed regular analyses to assess project performance:
  • Cost Performance Index (CPI): Calculated as EV/AC, this metric showed the cost efficiency of the project.
  • Schedule Performance Index (SPI): Calculated as EV/PV, this metric indicated the schedule efficiency of the project.
  1. Performance Reports: The project manager generated weekly performance reports, including CPI and SPI, to identify trends and areas needing attention.

Results and Benefits

  1. Improved Estimation Accuracy: By using User Story Points, the team achieved more accurate effort estimations, reducing the risk of underestimating or overestimating tasks.
  2. Enhanced Transparency: EVM provided a clear, quantifiable measure of project performance, allowing stakeholders to understand the project’s status objectively.
  3. Proactive Decision-Making: Early detection of cost or schedule variances enabled the team to take corrective actions promptly, ensuring the project stayed on track.
  4. Stakeholder Confidence: Regular updates and transparent reporting built stakeholder confidence, fostering a collaborative and supportive environment.

Challenges and Lessons Learned

  1. Initial Learning Curve: Both User Story Points and EVM required initial training and adjustment, but the investment paid off in improved project control and predictability.
  2. Consistent Communication: Regular communication between the development team and stakeholders was vital to align expectations and address concerns promptly.
  3. Continuous Improvement: The team embraced a culture of continuous improvement, regularly reviewing and refining estimation and tracking processes based on feedback and performance data.

When issuing user story points, several criteria and factors need to be considered to ensure accurate and meaningful estimates. User story points are a relative measure of effort required to complete a user story, and they help Agile teams plan and prioritise work. Here are the key criteria and factors to take into account:

1. Complexity

  • Technical Complexity: Consider the technical challenges and unknowns involved in the story.
  • Domain Complexity: Evaluate how complex the business logic or domain knowledge is.

2. Effort

  • Work Effort: Estimate the total amount of work required, including coding, testing, and integration.
  • Dependencies: Account for any dependencies on other stories, teams, or external systems.

3. Risk and Uncertainty

  • Unknowns: Assess the level of uncertainty and potential for unforeseen issues.
  • Risks: Identify any risks that could impact the story, such as technology changes or integration challenges.

4. Volume of Work

  • Size of Tasks: Break down the story into smaller tasks to get a better understanding of the volume of work.
  • Number of Interactions: Consider the number of user interactions or data points involved.

5. Skills Required

  • Team Expertise: Take into account the team’s familiarity with the technology, tools, and domain.
  • Specialised Skills: Consider if any specialised skills are needed and their availability within the team.

6. Experience from Past Stories

  • Historical Data: Use data from previous similar stories to inform your estimates.
  • Lessons Learned: Apply lessons learned from past sprints or projects to improve accuracy.

7. Dependencies and Inter-dependencies

  • Internal Dependencies: Understand dependencies within the team or between stories.
  • External Dependencies: Consider dependencies on other teams, departments, or external partners.

8. Testing and Validation Effort

  • Testing Requirements: Evaluate the effort needed for testing, including unit tests, integration tests, and user acceptance tests.
  • Validation: Consider the effort required to validate that the story meets the acceptance criteria.

9. Tooling and Environment

  • Development Tools: Assess the impact of the tools and environments used for development and testing.
  • Setup Time: Include time needed for setting up development and test environments if required.

10. Collaboration Needs

  • Team Collaboration: Consider the level of collaboration required among team members.
  • Stakeholder Involvement: Account for the time needed to interact with stakeholders for requirements clarification or feedback.

Estimation Techniques

  1. Planning Poker: A collaborative estimation technique where team members discuss and agree on story points.
  2. T-Shirt Sizing: A method of categorising stories into sizes like XS, S, M, L, XL based on effort.
  3. Bucket System: Grouping stories into predefined buckets with assigned point values.
  4. Affinity Mapping: Organising stories into clusters based on similarity in effort and complexity.

Best Practices

  • Use a Baseline Story: Start with a well-understood baseline story to compare others against.
  • Collaborative Estimation: Involve the whole team in the estimation process to leverage diverse perspectives.
  • Continuous Calibration: Regularly review and adjust story points based on team velocity and feedback.
  • Consistent Criteria: Establish and stick to consistent criteria for estimating story points across the team.

By considering these factors and criteria, teams can achieve more accurate and reliable user story point estimates, leading to better sprint planning, improved predictability, and successful project delivery.

What about Value, does it have any incidence?

In the context of issuing user story points, value itself typically does not directly influence the estimation of effort, complexity, or other factors that determine the story points. Story points are primarily a measure of the effort required to complete a story, rather than its business value. However, understanding the value of a story can influence prioritisation and decision-making in the following ways:

Prioritisation and Value

  1. Business Value Consideration: While story points focus on effort, the business value of a story is crucial for prioritising which stories to work on first. High-value stories may be prioritised to deliver maximum impact to the business early on.
  2. Balancing Effort and Value: Teams might prioritise stories that offer the highest value for the least effort, ensuring efficient use of resources and quick delivery of critical functionality.
  3. Stakeholder Alignment: By considering the value, teams can ensure that their efforts align with stakeholder expectations and business goals, leading to higher satisfaction and better alignment with strategic objectives.

Influence on Decision Making

  1. Sprint Planning: During sprint planning, understanding the value of user stories can help in selecting stories that provide the most significant benefits within the available capacity.
  2. Product Backlog Management: Product owners can use the value to make informed decisions about backlog grooming and maintenance, ensuring the team focuses on high-impact stories.
  3. Risk Management: High-value stories might warrant additional attention to risk management, ensuring that potential issues are identified and mitigated early.

Integrating Value with Effort Estimation

While value does not directly impact the story point estimation, integrating value into the overall planning process can lead to better outcomes:

  1. Weighted Shortest Job First (WSJF): A prioritisation technique used in SAFe (Scaled Agile Framework) that combines both value and effort. It calculates a priority score based on dividing the value (e.g., business value, time criticality) by the effort (estimated in story points).
  2. Value-Based Planning: Incorporating value in planning sessions to ensure the team understands the importance of each story in terms of business impact.

Conclusion

The case of TechSolutions demonstrates how integrating User Story Points and Earned Value Management can lead to better project outcomes. By leveraging these methodologies, the company enhanced its ability to estimate effort, track progress, and deliver value, ultimately driving project success and stakeholder satisfaction. This real-life example underscores the importance of adopting structured yet flexible approaches in project management to navigate complexity and achieve strategic goals. As always, keep in mind the power of such practices, techniques and toosl when you work in Enterprise Architecture projects of ANY kind or size.

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