During the first Projects and Agile Community of Practice lean coffee the 'Budgeting for Agile Projects' topic received most votes and most talking time. Given the interest in the topic I committed to the group to pull together some of the current thinking on Agile budgeting and present this at this following Community of Practice meetup. Others in the community were invited to contribute too and Felix Jalleh from the Ministry of Social Development also presented as part of this session.
The presentation had the sub-title of 'bet small or bet large'. I presented on the bet small part and Felix on the bet large topic. This post provides a very brief and high-level summary of our presentation.
- Even when you bet small the numbers can still be quite sizable. For example, a two- week sprint with a project of 9 contractors is a $100,000 spend. If internal staff are used (typically not costed) this figure can reduce substantially.
- VUCA - the world is increasingly volatile, uncertain, complex and ambiguous
- Projects no longer take a 'planned' linear path from A to B, but an evolving path as more information is discovered
- Making small bets decreases work in progress, increases speed of delivery and increases flexibility to "turn on a dime for a dime".
Felix spoke about:
- A key take away being to focus on increasing value over lowering cost, as summarised in Michael Bolton's quote "if you're relentlessly focused on lowering cost, you'll quickly become oblivious to opportunities to increase value"
- Scaled Agile Framework (SAFe) focuses on Lean budgets and Lean portfolio management - the approach helps work across silos and focus on value streams
- Budget is not allocated to individual projects but to the full value stream
- The intent is to manage budget, resources, governance at enterprise and portfolio level while giving flexibility to manage the work, scope, quality and value delivered at the programme and team level
- The approach supports getting the right balance between lowering cost and increasing value.
Something in the middle
I then facilitated an estimation exercise with the group to show how budgets might be able to be estimated for projects that fit in the middle ground between bet small and bet large. The exercise involved ordering the size of 'personal jobs' and used the Fibonacci sequence and relative sizing to estimate the size of the jobs. Fibonacci as a basis for story points is not supposed to be exact, it is a nebulous unit of time and the time to deliver depends on the velocity of the team doing the work. There was a lot of discussion during the exercise and a lot of take aways for how Agile budgets might work in practice.
Carl Weller is a Principal Consultant specialising in Project Management and Agile Leadership, based in our Wellington office.