Discover how to use Story Points, Relative vs. Absolute Estimation, and the Fibonacci sequence to streamline Agile estimation. Learn why this approach improves collaboration, accuracy, and sprint planning.
Table of Contents
- Introduction to Agile Estimation
- Relative vs. Absolute Estimation
- Story Points: A Closer Look
- Fibonacci Sequence for Story Points
- Practical Exercise: Comparing Two Buildings
- Pros and Cons of Story Points
- Putting It All Together
- Final Thoughts
1. Introduction to Agile Estimation
Estimation is a core practice in Agile development and Scrum methodology. Whether you’re organizing your next sprint or forecasting a release date, one question invariably arises: “How long will it take?”
Relative Estimation and Story Points address the challenge of creating accurate and flexible estimates. By focusing on complexity, uncertainty, and risk—instead of getting locked into exact hours—you empower teams to deliver more effectively.
In this guide, we’ll cover:
- What Relative Estimation and Absolute Estimation are
- Why Story Points matter
- How to use the Fibonacci sequence for Scrum Poker
- A practical exercise comparing two buildings
- The pros and cons of Story Points
2. Relative vs. Absolute Estimation
Absolute Estimation
Absolute Estimation assigns a precise measure (like hours, days, or cost) to a task. Examples include:
- “Feature X will take 8 hours.”
- “This project will cost $10,000.”
While stakeholders might prefer exact figures, Absolute Estimation can create a false sense of precision. Complexities, dependencies, and unforeseen obstacles often make these estimates unreliable.
Pros of Absolute Estimation
- Provides a clear numeric value (hours, dollars, etc.)
- Offers perceived certainty to stakeholders
Cons of Absolute Estimation
- Risk of over-commitment to specific timelines
- Hard to accommodate changing requirements
- Encourages continuous “explanation” of missed estimates
Relative Estimation
In Relative Estimation, tasks are measured by comparing them to each other:
- “Is Feature X bigger or smaller than Feature Y?”
- “Is Task A twice as complex as Task B?”
Humans excel at comparing larger vs. smaller rather than pinning down exact values. This approach frees teams from hours-based commitments and fosters faster consensus.
Pros of Relative Estimation
- Quick agreement on bigger or smaller tasks
- Natural for human thinking (comparing and contrasting)
- Avoids the pitfalls of numerical precision
Cons of Relative Estimation
- Less intuitive for those used to exact hours/days
- Some stakeholders push for “hour conversion,” weakening the approach
3. Story Points: A Closer Look
Story Points represent complexity, risk, and effort rather than clock time. Teams assign Story Points to user stories or tasks to gauge:
- Work involved (amount of effort)
- Complexity (how challenging or intricate the task is)
- Uncertainty and Risks (unknown factors that could arise)
Key Insight: By using Story Points, teams avoid getting locked into an “hours” mentality. Instead, they focus on relative comparisons that foster more accurate planning and capacity forecasting.
4. Fibonacci Sequence for Story Points
One popular way to assign Story Points is via the Fibonacci sequence: 1, 2, 3, 5, 8, 13, 21…
Why Fibonacci?
- Prevents False Precision: Forces teams to pick whether something is closer to 5 or 8, rather than 6 or 7.
- Captures Growing Uncertainty: Jumps between numbers reflect increasing ambiguity for larger tasks.
- Accelerates Consensus: Fewer numeric choices discourage endless debates.
When using Scrum Poker (also known as Planning Poker), each team member reveals a Fibonacci card for the story in question. If there’s a discrepancy (e.g., one person says 2, another 8), the team discusses until reaching consensus—often uncovering hidden complexity or risk in the process.
5. Practical Exercise: Comparing Two Buildings
Imagine you have two buildings, A and B. You want to estimate how long it takes to climb each building’s stairs.
- Absolute Approach: You might guess the exact time (minutes or hours) for each building, then add them. This can be inaccurate if you lack precise data.
- Relative Approach: You observe that Building A is about double the size of Building B.
- By climbing half of a quarter of Building B, you can extrapolate the overall time for B and then double it for A.
- This method is simpler and provides a “close enough” estimate for planning.
In the same way, Relative Estimation in Agile focuses on the ratio of complexities between tasks, rather than forcing you to pinpoint exact durations.
6. Pros and Cons of Story Points
Pros
- Enhanced Collaboration
- Involves the entire Scrum team, encouraging open discussion during estimation.
- Emphasizes Complexity & Risk
- Conversations focus on what makes a task difficult or uncertain, not just time.
- Speeds Up Consensus
- Relative comparisons (bigger vs. smaller) are often reached quickly.
- “Close Enough” Accuracy
- Agile thrives on iterative improvements; being directionally correct is more valuable than hyper-precision.
Cons
- Learning Curve
- Teams new to Agile might struggle to let go of exact hour estimates.
- Subjectivity
- Different skill levels or experiences can initially produce varied point assignments (improves with practice).
- Stakeholder Pressure
- External parties may push for hour-based metrics, reducing the benefits of relative estimation.
7. Putting It All Together
- Choose Relative Over Absolute: Humans naturally compare rather than guess precise figures; leverage that to reduce error.
- Adopt Story Points: Emphasize work, complexity, and risk—not just time.
- Use Fibonacci for Estimation: The Fibonacci sequence keeps you from assigning false precision and helps reflect growing uncertainty.
- Practice With Simple Examples: Like comparing buildings, practice on easy scenarios to build confidence and refine your team’s approach.
Over time, your velocity—the total number of Story Points completed per sprint—becomes a reliable indicator of your team’s capacity. By iterating and adjusting, you’ll gain more predictable delivery cycles.
8. Final Thoughts
Agile estimation isn’t about being perfect; it’s about being adaptive and collaborative. Moving from Absolute to Relative Estimation via Story Points empowers your team to respond to change, uncover hidden complexities, and ultimately deliver better software and products.
Have questions or insights on Story Points, Scrum Poker, or Agile Estimation?
Drop a comment below and share your experiences!
Additional Resources to Boost Your Agile Knowledge
- Scrum Guides – Official Scrum framework guidelines.
- Agile Manifesto – Foundational principles of Agile.
- Planning Poker – Tips and techniques for effective team estimation.
If you found this guide helpful, share it with your team or on social media to help spread effective Agile practices!