In my live training, I often ask students why we estimate. The answer I usually hear is some version of...
“So we know how big something is and how long it will take.”
And yes, this is important. However, there is more. In this post, I will break down the 3 purposes of an estimate. It's actually the third one that I think is most important and often missed.
3 Purposes of Estimation
#1 - Estimation helps us know that an item is small enough to bring it into a Sprint.
If it is not small enough to have a reasonable likelihood of getting it to Done in a Sprint, we need to break it down smaller. Larger things are likely more complex and will bring more unpredictability.
So if it's too big, we need to seek ways to simplify. Is there a smaller piece of value we can deliver? What would be a first piece of usable value that we can validate and then build upon in the future?
#2 - An estimate can help with forecasting (if that’s important for our business.)
The relative size of something combined with where it is ordered in the Product Backlog, our past history of delivering valuable Increments, and our understanding of the amount of complexity and change in our environment can help us with forecasting.
But remember, forecasts are not promises or guarantees. Forecasting helps our business prepare to support customers and achieve goals. Forecasting helps our business have better conversations about what we are working on and the order of it, so we can continually create alignment in the organization.
#3 - An estimate helps a Product Owner determine if it is worth the investment.
This is about enabling value alignment conversations. A Product Owner may decide a Product Backlog item (PBI) is not worth it and remove it entirely from the Product Backlog. Or perhaps Developers and Product Owner get creative and discuss alternative solutions for achieving the desired outcomes.
Opening up creative possibilities is a beautiful thing and something I really love about Scrum.
Estimates can also help a Product Owner make decisions about ordering the Product Backlog.
Estimation is an aspect of Product Backlog refinement. It's always important to understand WHY we are doing the things we are doing, so we are not creating waste or unintended consequences. If you're only focusing on the first two purposes, you are missing out on having some very helpful conversations. And if you think estimation serves another purpose, well, start looking out for those unintended consequences.
In my Professional Scrum Training, I help people go beyond the mechanics, so they can learn to be more intentional in their Scrum practice. My goal is to enable people to think in a value-driven, empirical way so that it becomes a habit they integrate into how they show up as leaders.
P.S. Don't forget that all estimates are wrong ;-)