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Agile Budget

How to evaluate budget for a project in Agile?
The process in Waterfall is: Gather requirements, Estimate time and resources and then create a capital budget.

In case of Agile, we have a set of requirements (Product Backlog) which keeps on changing.
How to estimate resources and time for a scope that is not fixed?
How to estimate a contract's price?
How do we charge a client for a project that will be refined while being built?
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Khushboo -

The traditional approach to projects delivered in an agile manner would be to fix cost and schedule and let scope (or at least detailed requirements) be the variable.

With this, you'd set a price based on the team's high-level (e.g. analogous or other top-down) estimate of the costs plus your profit margin.

One approach is to have the team relative size the main themes, features or epics, and if they've worked together, take an educated guess as to their velocity and use those two metrics (estimated size of the backlog in story points and assumed velocity) to come up with an expected number of iterations or sprints.

That will give you a high-level estimate of time which can then be translated into cost.


Khushboo, there have already been a few discussions on this topic. You should check out the following posts:

As Kiron pointed out, the basis is the release planning done together with the customer (product owner) based on the scope to be delivered represented by the backlog, the team's understanding of their own velocity, the needed number of sprints to deliver the product backlog with sized stories translated into costs. The total gives you the budget (including costs for buffers like hardening). Changes to the cost baseline are triggered by proper management of the prioritized backlog. Adding scope is expected change in an agile mindset. It is utmost important that this mindset is also understood at the customer side.

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