The Effort Estimation Matrix

by Shaun Thompson | January 18, 2024 | Blog

A Tool for Estimating Agile Story Points

Introduction:
In both Agile project and product management, accurately estimating effort is both vital and challenging. Teams often face the difficult task of aligning their estimations with the fluid nature of tasks. To transcend the mechanical use of story points, we introduce a novel approach that embraces a mindset conducive to faster, more consistent estimations of effort.

This approach, known as the Effort Estimation Matrix, offers a dynamic framework that integrates past project insights, facilitating more precise and adaptable planning. By leveraging collective experience and retrospective learning, the Matrix aims to reduce the uncertainty and variability often encountered in traditional estimation methods.

The Genesis of the Effort Estimation Matrix:
The Effort Estimation Matrix, inspired by complex adaptive systems theory and the Structure-Behavior model (SBM), was created not as a prescriptive tool but as a way of incorporating reflective estimation into future estimation. The intent is to simplify and accelerate the estimation process, leveraging a reference table of effort that directly relates to a team's work and insights. 

The table evolves with each project, becoming an iterative, living document that captures the unique experiences and lessons learned by the team. It ensures that each estimation is grounded in real-world experiences and adapted to the team’s evolving understanding of project complexities. In this way, the Effort Estimation Matrix serves as a bridge between theoretical, technical models and practical applications, enabling teams, leaders, and organizations to make more informed, context-driven decisions.

Understanding the Matrix:
At a high level, the Matrix helps teams categorize work based on understandability and predictability. By assessing completed stories, teams can align their estimations with retrospective insights, fostering a shared understanding that paves the way for more accurate future estimates.

For those interested in a deeper dive into the theory, complex adaptive systems offer a lens through which teams can view their work as part of a dynamic, interconnected environment where knowledge and outcomes evolve through interaction and adaptation.

Core Benefits of the Matrix:

• Simplified Estimations: The Matrix empowers individuals to consistently estimate new backlog items, referencing a custom table built from the team's own experience and capacity.
• Enhanced Forecasting: With a fully estimated backlog, Product Owners can project completion timelines more precisely, relying on the team's current velocity and historical performance.
• Focused Backlog Refinement: Teams can now concentrate on refining backlog items that embody greater complexity and uncertainty, allocating the necessary attention to mitigate risks.
• Streamlined Complexity Assessment: The Matrix distills the complexity assessment into four pivotal questions, enhancing the estimation process's clarity and reducing cognitive overhead.
• Risk Threshold Management: By setting an upper limit on effort points for the Sprint plan, teams can manage the intake of complex or unpredictable work, encouraging the breakdown of backlog items when needed.
• Team Alignment and Engagement: Creating and utilizing the Matrix can align the team on the required effort for backlog items, fostering engagement and collaborative planning.
• Adaptability to Change: The flexible framework of the Matrix allows teams to adapt to project evolutions, recalibrating as understanding or environments change.
• Efficiency in Estimation Sessions: The Matrix serves as a clear reference point, streamlining estimation sessions and minimizing time spent on debate.
• Improved Accuracy Over Time: The ongoing refinement of the Matrix through reference stories promises improved and more consistent estimation accuracy, resulting in better planning and resource allocation.

The Matrix:

Figure 1: Effort Estimation Matrix (Original)

Sample Reference Table:

Table 1: Sample Reference Table Format

Applying the Matrix:
The Matrix's application involves a series of steps where teams recalibrate their estimation process using their completed stories:

1. Introduce the Matrix concept.
2. Independently re-estimate recently completed stories, leveraging a lightweight Delphi approach.
3. Discuss to reconcile major discrepancies in estimates, akin to "Planning Poker".
4. Establish or update a reference table that serves as a touchstone for future estimations, aiding in the integration of new team members and keeping estimations current.
5. Reference the Matrix and Reference table regularly while adding backlog items, or in refining work during Backlog Refinement and Sprint Planning.

Conclusion:
The Estimation Matrix is more than just numbers; it's about understanding the narrative behind each task. I encourage you to experiment with using the Matrix in your team. Use the tool to reflect on your work, create and regularly update your reference table, and share your insights with the Agile community. Should you seek to delve deeper or fine-tune your estimation process, my colleagues at Scrum Inc. and I are prepared to facilitate workshops to explore various estimation techniques, including this Matrix, to optimize your backlog management.