Harnessing Monte Carlo Simulations for More Accurate Sprint Planning

By: Agile Velocity | Oct 11, 2023 |  Agile,  Kanban,  Scrum

A picture of chips, dice, and cards to symbolize Monte Carlo simulation


When it comes to Sprint Planning in the Scrum framework, precision and predictability are paramount. Yet Sprint Planning based on story points and average velocity, while popular, has inherent flaws. 

First, the assignment of story points is subjective and can vary widely among team members due to differences in experience, perception, and understanding of the work. This variance introduces inconsistency in estimation. 

Second, relying on average velocity fails to account for the natural variability in team performance across sprints. Circumstances like team composition changes, differing complexities in user stories, or unforeseen technical challenges can influence velocity, making a simple average an unreliable predictor. Placing an undue emphasis on these metrics creates unrealistic expectations, which can lead to inadequate planning, increased pressure, and the potential for burnout.

Another far less labor-intensive process, is using Monte Carlo simulations based on the team’s past throughput data to forecast how much work can be delivered in a sprint (within a certain degree of probability). Let’s explore this method further, understand its intricacies, and see how Scrum teams can implement it for enhanced accuracy in Sprint Planning.

Monte Carlo Simulations: A Closer Look

Originally rooted in complex mathematical models and named after the renowned Monte Carlo Casino, this method employs random sampling and statistical modeling to predict outcomes. The central idea is to repeatedly simulate an event using varied random inputs, and then use statistics to analyze the outcomes..

The Role of Throughput in Agile

In Agile frameworks, throughput typically refers to the quantity of work items (like features, user stories, or tasks) completed within a specific timeframe. It serves as a measure of team output and productivity…and hopefully aligns with the outcome of delivery of value! By collating throughput data over several sprints, teams can obtain a clearer picture of their delivery patterns.

The Benefits of Using the Monte Carlo Technique

The benefits of applying Monte Carlo simulations in a Scrum context translate into substantial advantages for both Agile team members and delivery leaders in their daily work. 

For Agile team members, this data-driven approach means more accurate sprint commitments, reducing the stress of overcommitting and the disappointment of underdelivering. It empowers teams to make well-informed decisions based on historical data, enhancing their ability to set achievable goals and manage stakeholder expectations effectively. 

Additionally, Monte Carlo simulations enable Agile teams to navigate the inherent uncertainties of software development by providing a statistical view of possible outcomes, allowing them to proactively prepare for various scenarios and adapt as needed. 

For delivery leaders, this methodology fosters a culture of empirical decision-making, shifting the paradigm from intuition-based to data-backed choices. It not only streamlines the planning process but also facilitates iterative improvement, highlighting areas for growth and optimization, ultimately driving higher levels of performance and predictability in Agile project delivery.

How to Use MCS in Sprint Planning

Here’s a quick start guide to integrating Monte Carlo simulations into your Sprint Planning:

  1. Collect Team Data: Start by gathering throughput data from previous sprints. Note that you’ll only need about ten days of throughput data to get started but you’ll want to continuously re-forecast as new data come in.
  2. Establish Throughput Boundary: From your data, discern the minimum and maximum throughput values. These will delineate the sampling boundaries for the simulation. You’ll want to pick past data that will be as similar as possible to future work.
  3. Configure & Run the Simulation: This often requires software or tools tailored for Monte Carlo methods but you can absolutely randomize data through a spreadsheet. Use your throughput range to guide thousands (or even tens of thousands) of simulated sprints, each picking random throughput values within your defined bounds.
  4. Review Result Analysis: Post-simulation, you will see a distribution of potential outcomes. The distribution of these results will create a curve of the likelihood of each range of outcomes. 

Dive deep into this distribution:

  • Probability Determination: Ascertain the likelihood of different outcomes. For instance, a finding could suggest a 65% likelihood of completing 7-10 stories in the upcoming sprint.
  • Percentile Analysis: Understand high-confidence outcomes. If you’re looking for a 90% confidence level, identify a throughput value where 90% of your simulations result in that value or more.
  • Commit with Confidence: The team can now make well-informed decisions about their commitments and understand the accepted risk associated with that commitment.

Learn More about Data-Driven Forecasts and Iterative Improvement

Monte Carlo simulations based on past throughput data offer Scrum teams a robust tool to refine and enhance their sprint commitments. It’s a combination of data-driven foresight and iterative refinement. 

  • Empirical Decision-making: Monte Carlo shifts the decision-making paradigm from being intuition-based to being empirically grounded, ensuring decisions are anchored in historical data.
  • Navigating Uncertainty: While software development is full of uncertainties, having a statistical view of possible outcomes helps teams manage stakeholder expectations and prepare for various scenarios.
  • Iterative Improvement: This method is not a one-off. As teams consistently gather data and refine their simulation parameters, they gain deeper insights into their performance, highlighting potential areas for growth and enhancement.

Dive deeper into how these metrics can supercharge your team’s performance. Contact us to learn more. 


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