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A Step-by-Step Guide on Scrum Velocity Calculation

Scrum is a popular Agile framework that helps teams deliver high-quality products in short timeframes.

One key aspect of Scrum is measuring progress, and one of the most common metrics is velocity.

In this blog post, we will dive deep into understanding how to calculate velocity in Scrum, its importance, and how it can help your team become more efficient and productive.

What is Velocity in Scrum?

Velocity is a measure of how much work a Scrum team can complete within a time-boxed iteration or Sprint which is typically a two or four-week period.

It’s usually expressed in story points, which represent the effort required to complete a user story or a backlog item.

Velocity helps teams estimate the amount of work they can commit to during a Sprint and provides insights into how efficiently they’re working.

Types of Velocity in Scrum

There are several types of velocity that can be used to track and predict a team’s performance:

1. Actual Velocity

This is the total number of story points completed by the team during a Sprint. It is calculated at the end of each Sprint, providing a historical reference for the team’s performance.

2. Average Velocity

This is the average number of story points completed by the team over a specific number of Sprints, typically the last 3-6 Sprints.

Average velocity helps to smooth out fluctuations in the actual velocity, providing a more stable metric for forecasting future performance.

3. Predicted Velocity

This is an estimate of the team’s velocity for an upcoming Sprint, based on their average velocity and any known factors that may impact the team’s capacity, such as team members being on vacation or working on other projects.

4. Initial Velocity

When a Scrum team is first formed, they may not have historical data to calculate their average velocity.

In this case, an initial velocity can be estimated based on the team’s composition, experience, and the size and complexity of the project.

How to Calculate Velocity in Scrum

Calculating velocity is relatively straightforward. Here’s a step-by-step guide:

1. Estimate Story Points

During the backlog refinement or Sprint Planning, the Scrum team assigns story points to each user story or backlog item.

The story points represent the effort required to complete the item, taking into consideration factors like complexity, uncertainty, and dependencies.

Commonly used scales for estimating story points are the Fibonacci sequence (1, 2, 3, 5, 8, 13, etc.) or T-shirt sizes (S, M, L, XL).

2. Track Completed Work

Throughout the Sprint, the team works on the backlog items and moves them to a “Done” state once they’re completed, meeting the Definition of Done.

3. Calculate Velocity

At the end of the Sprint, add up the story points of all the completed items. This sum is the team’s velocity for the Sprint.

For example, let’s say a team has completed 5 user stories with the following story points: 3, 5, 8, 13, and 2. The team’s actual velocity for this Sprint would be 3 + 5 + 8 + 13 + 2 = 31.

Next, you need to track the number of completed story points over a few Sprints. About three to six Sprints should do.

Then add up the total number of completed story points and divide by the number of Sprints. For example:

Sprint 1: 31 points
Sprint 2: 24 points
Sprint 3: 35 points
Total is 90 points in 3 Sprints.
90/3 = 30. This is the average velocity of this team per Sprint.

Keep in mind that velocity should be calculated based on the work that has been completed, not just started. Partially done work shouldn’t be included in the velocity calculation.

What is the Importance of Velocity in Scrum?

Velocity is crucial in Scrum for several reasons:

1. Predictability

By tracking velocity over time, teams can forecast how much work they can accomplish in future Sprints, enabling better planning and resource allocation.

2. Transparency

Velocity helps stakeholders understand the team’s progress and capacity, fostering trust and collaboration between team members and stakeholders.

3. Continuous Improvement

Analyzing velocity data can reveal patterns and trends, helping teams identify areas where they can improve their processes and increase their efficiency.

Adjusting Sprint Velocity

Velocity should remain relatively consistent Sprint-to-Sprint for a team. However, there are a few situations where the velocity may need adjustment:

  1. A team member joins or leaves: Adding or losing a team member will impact the team’s capacity so the velocity needs to be re-calibrated. Measure the next 1-2 Sprints and adjust.
  2. New technology or process: Learning a new skill or way of working will slow a team down initially. Measure the impact over 2-3 Sprints before adjusting velocity.
  3. Environment changes: Something like moving to a new workspace or updating tools can disrupt a team’s rhythm. Re-calibrate velocity after the team has adjusted to the change.
  4. Consistently over or under-committing: If a team is frequently not completing all stories committed to in a Sprint or finishing significantly more than committed, it indicates their velocity needs updating to properly reflect their current throughput. Measure the next Sprint(s) and adjust.

Velocity should remain consistent once a team’s environment and work approach has stabilized.

Small variations of a few points every few Sprints are expected, but if there are frequent or large changes needed to velocity, it may indicate there are other issues impacting the team that need to be addressed.

However, by measuring, adjusting, and re-calibrating velocity as needed, it remains an extremely useful metric for planning and forecasting work.

How to Use Velocity for Planning?

Velocity can be a powerful planning tool when used correctly. Here’s how to use it effectively:

1. Calculate the Average Velocity

To account for variations in sprint performance, calculate the average velocity over the last three to six Sprints. This will provide a more stable and reliable indicator of the team’s capacity.

2. Forecast Future Sprints

Use the average velocity to estimate how much work the team can complete in future Sprints.

For example, if a team’s average velocity is 30 story points and the upcoming sprint has 90 story points worth of work in the backlog, the team can expect to complete the work in approximately three Sprints.

3. Adjust Sprint Commitments

Based on the team’s average velocity, adjust the amount of work committed to each Sprint to avoid overcommitting or undercommitting.

The goal is to find a balance that allows the team to work at a sustainable pace while delivering value to stakeholders.

4. Review and Adapt

Regularly review velocity data during Sprint reviews and Retrospectives. Analyze trends, identify areas for improvement, and adapt the team’s process to increase efficiency.

How to Improve Velocity in Scrum

Improving velocity in Scrum is about optimizing your team’s ability to deliver high-quality work consistently and predictably over time.

Here are some tips to help you improve your team’s velocity in Scrum:

1. Set Realistic Goals

Make sure your team’s goals are achievable and clear. Overcommitting can lead to stress, lower-quality work, and reduced morale. Assess past performance and use that data to set achievable goals for future Sprints.

2. Clarify Requirements, Priorities, and Expectations

Ensure that the Product Owner provides clear, well-defined user stories and that the team understands the priorities and expectations for each sprint to help avoid misunderstandings and wasted effort.

3. Promote Cross-Functionality

Encourage your team members to develop multiple skills so that they can adapt to changing workloads and fill in for one another when needed. Cross-functionality helps reduce bottlenecks and dependencies, ultimately boosting velocity.

4. Focus on Continuous Improvement

Encourage your team to regularly assess their processes and practices, and to identify areas for improvement. Implementing small, incremental changes can lead to substantial long-term improvements in velocity.

5. Limit Work in Progress (WIP)

Limiting WIP helps your team focus on a smaller number of tasks at a time, ensuring they complete them more quickly and with higher quality.

Use tools like Scrum boards to visualize your team’s WIP and make adjustments as needed.

6. Address Impediments quickly

When issues or blockers arise, address them as quickly as possible to minimize their impact on the team’s velocity. The Scrum Master plays a critical role in identifying and removing impediments.

7. Improve Communication and Collaboration

Foster an environment of open communication and collaboration within the team. Regularly hold stand-up meetings, retrospectives, and planning sessions to keep everyone in sync and working together effectively.

8. Optimize Sprint Length

Experiment with different Sprint lengths to find what works best for your team. Shorter Sprints can help maintain focus and adaptability, while longer Sprints may allow for more in-depth work.

9. Measure and Track Progress

Use metrics like velocity, burndown charts, and cumulative flow diagrams to track your team’s progress and identify trends.

Regularly reviewing these metrics can help you identify areas for improvement and make informed decisions about future Sprints.

10. Celebrate Successes

Recognize and celebrate your team’s achievements to boost morale and motivation. When your team feels appreciated, they’re more likely to stay engaged and maintain a high level of performance.

Common Mistakes and How to Avoid Them

When working with velocity, teams should be mindful of some common pitfalls:

1. Comparing Team Velocities

Velocity is a team-specific metric, and comparing it between teams can lead to misunderstandings and unhealthy competition.

Each team may use different estimation scales, have different levels of experience, and work on different types of tasks.

Focus on improving the velocity of each individual team rather than comparing them.

2. Obsessing over Velocity

While velocity is an essential metric, it should not be the sole focus for a team. Teams should also consider other factors such as quality, customer satisfaction, and collaboration.

Striving for high velocity at the expense of these other factors can lead to poor-quality products and unhappy stakeholders.

3. Gaming the System

There may be a temptation to inflate story points or count incomplete work as done to improve velocity. This can lead to inaccurate predictions and a breakdown of trust within the team.

Encourage honesty and transparency and emphasize that velocity is a tool for improvement, not a measure of individual performance.

4. Relying Solely on Past Performance

While historical velocity data is useful for planning, it’s essential to consider other factors that may affect future Sprints, such as vacations, changes in team size, or an increase in the complexity of work.

Adjust plans and expectations accordingly to avoid setting unrealistic goals.

Final Thoughts

Velocity is a valuable metric in Scrum that can help teams plan, forecast, and continuously improve.

By understanding how to calculate velocity and using it effectively, teams can optimize their processes, enhance collaboration, and deliver high-quality products on time.

Remember that velocity is just one piece of the puzzle. A successful Scrum team focuses on delivering value to the customer, and velocity is merely a tool to help achieve that goal.

Continuously monitor and adapt your team’s process, taking into account various factors such as quality, customer satisfaction, and collaboration, to create a truly high-performing team.

Now that you have a comprehensive understanding of how to calculate velocity in Scrum, it’s time to put this knowledge into practice. Happy sprinting!

David Usifo (PSM, MBCS, PMP®)
David Usifo (PSM, MBCS, PMP®)

David Usifo is a certified Project Management professional, professional Scrum Master, and a BCS certified Business Analyst with a background in product development and database management.

He enjoys using his knowledge and skills to share with aspiring and experienced Project Managers and Business Analysts the core concept of value-creation through adaptive solutions.

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