Agile Costings/Estimation

Last post 03:36 pm December 14, 2018
by Daniel Wilhite
2 replies
09:56 am December 12, 2018

Hello Everyone!

My name's Abbie and I'm a student at the university of Gloucestershire studying Business Computing. I'm currently writing my dissertation on agile project costings. I'm investigating the customer's demand of wanting agile cost estimations prior to development/up front (although, not agile) over a sprint by sprint basis. The end goal is to create a flowchart detailing an agile costing method to assist organisations with agile estimations.

I'm looking to interview 3-5 people about their experience with agile costings such as how do you currently estimate/cost, what tools do you use, do your customers want upfront cost, or was it a challenge to change their mindset etc. The interviews will be approximately 30 minutes to 1 hour via Skype, or face to face if preferred and within the South West area. Interviews are looking to take place at the end of Jan/beginning of Feb.

No personal information will be record and you and your company will remain anonymous. The only information I would require is the industry you work in and job title (if you consent).

If interested, please comment below and I can discuss further details. I appreciate your time reading my post, and hope you can help.

Thank you!

01:48 am December 14, 2018

The end goal is to create a flowchart detailing an agile costing method to assist organisations with agile estimations.

I think it might be best to reconsider your objective, or to focus it more tightly. An "agile costing method to assist organisations with agile estimations" may jeopardize empirical process control. Instead, stakeholders look to empirical data for any projections that are made, such as metrics and trends based on actual delivery.

In agile practice, an organization cares more about learning and value than about estimation and cost. The purpose of estimation is more constrained than you might suppose. Ken Schwaber once said:

"To cope with the complexity and unpredictability of software development, Jeff and I devised Scrum so it would use short cycles of development. If you will know the results within two weeks, the need for an accurate estimate disappears. The only reason for estimating is for a team to get its arms around how much they should try to take on."

03:36 pm December 14, 2018

I agree with @Ian. I think you may be working on the wrong theory.  In every company I have worked where any form of Agile (especially Scrum) was in place, expense were calculated based on a "standard cost".  They would take an average or mean cost of 1 developer for a year and then use that as a basis for determining the expense of development and in any kind of amortization.  I know that my explanation is extremely simplified because I'm not an Accountant. (I have a BBA but I failed the intro Accounting class 1 time and barely passed with a very low grade the second.)  But any organization that realizes the benefits of Agile practices will know that delivered value to end user/stakeholders is how to measure productivity and that the expense incurred is going to be somewhat variable. This would hold true to any customer that is requesting that Scrum or Agile practices be used in developing their request.  They would be asking for that because they want to see incremental delivery so that adaptions can be made quickly based on empirical data (i.e. a working incremental portion of their requested solution). They would accept an estimate based on per sprint costs and not require a total cost. 

If you really want to pursue your current theory, I'd suggest finding a way to interview individuals that are responsible for the accounting in companies that are using Agile practices.  I think they would be in a better position to provide you useful information and, in the true fashion of Scrum, they would be stakeholders in the value you are trying to produce.