Agile velocity vs Capacity planning

Agile Velocity Vs Capacity Planning: What’s the Difference?

Velocity refers to the rapidity of movement, i.e., speed. Capacity is the ability and availability of resources. Naturally, capacity has a profound impact on velocity and vice versa.

In agile project management, these two concepts play a critical role. They are used as metrics that shape the productivity and efficiency of agile scrum teams. As a result, agile velocity and capacity planning are essential information for any project manager navigating the evolving demands of software development.

In this article, we explore how. 

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Understanding Agile Velocity

Agile velocity refers to the amount of work a team can do in a sprint, which is typically two weeks long. Another way to measure it is the time taken by the team to complete a user story within a particular sprint. 

How to measure velocity?

Velocity in agile is calculated by summing up the story points for all completed user stories within a sprint. For instance, if you complete 10 user stories of 10 points each in a sprint, your team’s velocity is 100 points for that sprint.

You can also calculate the average number of story points completed across several iterations to serve as a quantitative measure of the team’s average velocity. 

Why do teams calculate agile velocity?

Project managers in scrum teams use agile velocity to:

  • Plan upcoming sprint effectively
  • Forecast project timelines and product lifecycle
  • Allocate the right resources to each project
  • Manage stakeholder expectations
  • Track individual and team progress on each task
  • Measure improvement on skills and capabilities

When is agile velocity used?

At the beginning, agile velocity is used in sprint planning. Essentially, using the speed  of work and the amount of work, project managers calculate the time it will take.

When is agile velocity not applicable?

Agile velocity is the sum of all story points in a sprint or an average of velocity across multiple sprints. This makes a few assumptions, such as consistency of efforts, accuracy of sport points estimation, etc. This brings with it certain limitations.

Inconsistent agile estimation techniques: Agile velocity is dependent on the accuracy and consistency of story point estimations. If team members estimate effort differently, velocity calculations can be skewed, with high downstream implications.

Team composition changes: Average velocity can be significantly impacted by changes in team composition. New team members might take longer to get up to speed, making it a less reliable metric over time.

Overlooking quality: When agile teams focus too heavily on maintaining or increasing their velocity, there’s a risk that the quality of work may decline. This can lead to increased technical debt, as the push for speed might cause teams to cut corners or overlook best practices.

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Exploring Agile Capacity Planning

Agile capacity planning refers to estimating and acquiring resources needed to complete given tasks. 

How to calculate agile capacity?

Agile capacity is measured by totaling the number of hours each team member can contribute to sprint tasks, i.e., add up available work hours for the two-week sprint and deduct any planned leave, training, or meetings. 

Why do teams perform capacity planning?

Project managers perform capacity planning to: 

  • Ensure that project commitments are realistic and achievable
  • Allocate resources efficiently 
  • Avoid overcommitment
  • Manage workload distribution 

By understanding and building capacity, an agile team can set more accurate sprint goals as well as enhance productivity and project delivery quality. 

Don’t know where to start? Use any of these capacity planning templates to guide you.

When is capacity planning used?

Capacity planning is a process followed before a project begins. It is used by project managers to build capacity to deliver projects that the sales teams acquire. It is a way to balance demand and supply.

When is capacity planning limited?

While capacity planning is a great framework for making calculations for project delivery, it is not without limitations. Some of the common limitations include:

Static measurements in a dynamic environment: Capacity planning is typically done at the beginning of sprints and tends to assume a static work environment. However, agile projects are dynamic, with frequent scope changes and priority shifts. This can render initial capacity plans obsolete.

Neglecting individual capabilities and task complexity: Agile capacity planning typically measures capacity in terms of time available, but this doesn’t always take into account the varying capabilities of individual team members or the complexity of specific tasks. 

Such oversight can lead to misallocation of tasks where some team members may be overwhelmed while others are under-challenged, impacting both morale and productivity.

Though closely related, agile velocity and capacity are two distinct concepts. Learning the key differences between the two can be a great boost to effective project management.

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Agile Velocity vs. Capacity: Key Differences

Fundamentally, velocity refers to the speed at which work can be delivered, given existing capacity, which is the number of person-hours available. Below are other key differences.

FeatureAgile VelocityCapacity
FocusFocuses on the output, i.e., the volume of work completedFocuses on the input, i.e., the amount of time available from the team 
PurposeUsed to forecast how much work a team can handle in future sprints based on past performanceUsed to plan future projects and evaluate whether the team can complete the work on time or not
CalculationSum total of story points completed by the team in each sprintSum total of available work hours of each team member (after accounting for any downtime)
InfluenceInfluenced by team efficiency, consistency in story point estimation, and changes in team dynamicsInfluenced by team availability, personal or team commitments outside the project, and public holidays
AdaptabilityAdjusts over time with changes in team composition, efficiency, and work methodsNeeds frequent updating to reflect actual team availability and any unexpected changes in workload
ApplicabilityBest for long-term projects to set reasonable timelines based on predictable performancesBest for short-term, sprint-level planning to optimize team performance and prevent burnout
Differences between agile velocity and Capacity planning

Though they serve different purposes, agile velocity and capacity planning are both critical to good agile scrum project management. Let’s explore the tools and strategies you need to track these metrics effectively.

Bonus: Understand DevOps vs. agile for deeper understanding into related software development metrics.

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Tools and Strategies for Measuring Velocity and Estimating Capacity in Agile

Accurately measuring your team’s velocity and capacity needs comprehensive data, real-time updates, and a robust project management tool like ClickUp. Let’s see how you can use all three to improve your velocity and capacity estimations.

1. Establish clear contributing factors for velocity and capacity

Several factors contribute to velocity and the team’s capacity. Incorporating all of these factors into your calculation is essential. 

Velocity metrics

  • Define the value of ‘story point’ clearly
  • Create a common scale that covers task complexity, tech used, etc. that the entire team understands uniformly
  • Crystallize the ‘definition of done’

An agile project management tool like ClickUp can streamline and automate this. For instance, you can publish the definition and scale of story points on ClickUp Docs that makes it accessible for everyone.

You can save and publish the definition of done as a checklist on ClickUp, which can be automatically applied to every task/feature/user story.

ClickUp checklist
ClickUp Task checklists and templates

Capacity metrics

  • Estimate based on the actual hours available for work
  • Deduct non-project time such as meetings, breaks, and administrative tasks
  • Invite employees and contractors to update their availability in real-time

ClickUp’s Workload view allows you to see the available capacity on your team. This is especially useful if someone is working on multiple projects, with work already assigned to them, taking up their capacity.

ClickUp’s Workload view
ClickUp Workload view for better capacity management

For capacity estimation, ClickUp’s Resource Planning Template is invaluable. It enables scrum teams to visualize the availability, helping project managers distribute workload evenly and according to each scrum team member’s capacity. 

2. Set up reports and dashboards

Based on the data from past performance, you can set up Spreadsheets or presentations to make the calculations you need. You can also use ClickUp Dashboards to automate report generation based on real-time data. 

ClickUp Software Sprints Dashboard
Automated sprint velocity report on ClickUp Dashboards

Use this data to effectively plan future iterations. If you’re a beginner in agile project management, try ClickUp’s Agile Sprint Planning Template, which organizes tasks, tracks sprint goals, and monitors progress all in one place. 

3. Dynamically update calculations and enable predictability

Treat velocity and capacity as crucial metrics that need regular re-evaluation. Include them in your retrospectives.

  • Discuss plan, actuals, and variance
  • Debate reasons for variance and steps to minimize it in the future
  • Track accuracy of projections over time

Document these discussions and review notes too for more contextual planning.

4. Actively seek and integrate feedback

While the accuracy of calculations of agile velocity and capacity can be internally controlled, its effectiveness depends on a number of external factors. For instance, you might deliver the minimum viable product in three sprints, but the customer/project sponsor might want it sooner.

So, actively seek feedback and integrate them into the process. ClickUp Forms is a simple and easy way to automate the collection of feedback. Depending on the relationship between you and the client, you can also give them access to your ClickUp Workspace for them to leave comments within tasks.

ClickUp Forms
Feedback surveys with ClickUp Forms

5. Measure accuracy of second and third-degree impact

Agile velocity and capacity planning is not just about the accuracy of the calculations itself but the overall impact on project delivery. For instance, if you estimate your agile velocity to be higher than what it really is, you will end up assigning work exceeding your team’s maximum capacity, causing burnout or under-delivery.

While in your retrospectives, also discuss the second and third-degree consequences of your calculations.

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Deliver Projects Faster and Better With ClickUp

Velocity and capacity are two highly interconnected concepts in any software development project. While capacity determines how much time and skill you have, velocity estimates what you can do with it.

In a way, both are crucial for effective project planning. They are indispensable for fine-tuning project delivery strategies, ensuring team productivity, eliminating burnout, and overall success. 

ClickUp’s project management platform is designed with exactly this in mind. It captures all the data required to calculate agile velocity and estimate team capacity in real time. And presents it in the way you want to see on customizable dashboards.

This visibility empowers the project manager and scrum master to optimize project delivery without burdening team members. See how ClickUp can transform your software development projects. Try ClickUp for free today!

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