Story Points are Cost

During a recent sprint planning, Our team got to discussing whether a rollover story should have it’s points adjusted. Specifically the suggestion was to reduce points to represent the remaining work. In that same conversation, several team members objected. These suggested the team would lose ‘credit’ if we changed the story points. While such a statement is understandable, it emerges from a faulty mental model.

Story points aren’t about the value of the story. They are estimated from the known work to be done, and an estimate on the unknowns which remain. That is, story point’s are estimates on cost. As you might guess, estimating costs of an unknown unknown are difficult to get accurate. In fact, that is the reason we use the Fibonacci sequence for story points! So instead of thinking ‘points like basketball’, I would suggest another paradigm: Budgeting.

A Team’s Velocity provides the team a good guess at how much scope or unknown unknowns it can handle within a given sprint. Put another way, velocity represents how much cost the team can probably pay within a sprint. Velocity, properly computed, is a good guide for the appropriate work to budget for, if you want a high probability of completing all the work. It is NOT a sign of how much value the team is producing for that work.

Thinking of velocity and points as ‘estimated cost’ will help your team better use the tool. And it will encourage them to ask more productive questions about their work. Questions such as: Is the value of this story worth that cost? And Is there a more cost-effective way to secure that value?