How to Estimate Budgets in Agile
Without in-depth, upfront planning, many project managers are unsure of how to calculate the cost and budget of an Agile project.
Estimating the cost before the project even starts can always be challenging, regardless of which project methodology you use. However, in an Agile project, you can tie the amount of time the project will take with its total cost.
First, create a burndown chart and use the burndown rate to estimate how many sprints will be in your project and when the project will end. Then, calculate how much the team will cost based on their hourly rates. Multiply each person’s rate by the number of working hours per week, then multiply that by the number of weeks in a sprint. Once you estimate the initial budget for your team, you can add any other costs, like technology, travel, or equipment.
You could also break down each user story into tasks. Once you have an idea of how many hours it will take to complete each task, you can estimate the project budget.
And lastly, you could use planning poker to estimate the effort required for development goals. Planning poker is a consensus-based, gamified technique for estimating the effort of development goals. Each team member makes estimates by playing numbered cards face-down on the table, instead of saying it out loud. The cards are then revealed and the estimates discussed with the whole team.