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Is Velocity help to identify the COST for given work?

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Harun Raseed
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Joined: Mon Dec 19, 2016 8:28 am

Is Velocity help to identify the COST for given work?

Postby Harun Raseed Tue Dec 20, 2016 5:14 pm

Normally organization defines the productive man hours for a story point and if we know the story points for the give work, based on this we must be able to come to know the cost as blow

COST of work = number of story point * price of productive man hours defined.

for example 100 story points is the size and $30 is for a man hour and 10 man hours is for a story point, then

(100 *10) *30 gives me COST.

But How Velocity helps me in getting this. Can you help me to understand please.
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Joined: Fri Jul 11, 2014 11:57 am

Re: Is Velocity help to identify the COST for given work?

Postby seema.sonkiya Wed Dec 21, 2016 5:48 am

Yes, in some organization velocity is the popular method to approximate the cost. Your calculation is correct. Now for your next question is how velocity helps in costing:

Based on the historical analysis of velocity, how many story points a team can deliver is approximated. And the number of ideal hours also approximated for a Story points. Now you know the per hour cost and from this information, the cost is approximated.

Note: It is not a good idea to judge velocity from the first sprint, it just gives an approximate. You need to monitor team velocity sprint by sprint, and once you observe that it becomes almost constant after a few sprints, you may need to change your plans.

For more details, watch the following video:

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