Estimating the cost of development of a feature by Scrum teams
How can we best track this business value and make a direct link to
the business cases for reporting purposes?
I will try to outline the steps to track the cost of developing a feature.
- Estimate the cost of one sprint: If, for example, you have 5 people in the dev team and share a Scrum Master and Product Owner among two teams, you can add up the cost of the total headcount of 5 + .5 + .5 = 6. Let us say the cost per sprint is $25,000.
- Estimate the velocity of the team in story points: You can arrive at an initial estimate after 3 sprints empirically and refine it further as you run more sprints. Let us say the velocity is 25 story points per sprint.
- Track the total number of story points to develop a feature: You can do this using the tool you use for Scrum (such as Jira, TFS...) by creating an epic for the feature. Make sure all the stories required to complete this feature, are marked as children of this one epic. The tool should let you see the total number of story points for the epic in one place. Let us say that, after your team has done all the estimations, the epic shows a total of 40 points. Note that this is an initial estimate. The team may make changes to this estimate in the Backlog Refinement meetings.
Your cost per story point is $25,000 / 25 = $1000.
The cost of the feature = Total story points for this epic * Cost per story point, namely, 40 * $1000 = $40,000.
You will have to find a way to track the $ earned by implementing the feature, which is outside of Scrum and typically involves many business assumptions.