Agile Management and Cost Management

By Mark C. Layton

On agile projects, cost is mostly a direct expression of project time. Because scrum teams consist of full-time, dedicated team members, they have a set team cost — generally expressed as an hourly or fixed rate per person — that should be the same for each sprint. Consistent sprint lengths, work hours, and team members enable you to accurately predict development speed. After you determine how many sprints your project will take — that is, how long your project will last — you can know how much your scrum team will cost for the whole project.

Project cost also includes the cost for resources like hardware, software, licenses, and any other supplies you might need to complete your project.

Creating an initial budget for an agile project

To create your project budget, you need to know the cost for your scrum team, per sprint, and the cost for any additional resources you need to complete the project.

Typically, you calculate the cost for your scrum team using an hourly rate for each team member — the development team, the scrum master, and the product owner. Multiply each team member’s hourly rate by available hours per week by the number of weeks in your sprints to calculate your scrum team’s per-sprint cost.

The cost for additional resources will vary by project. Take the following into account when determining your project costs:

  • Hardware costs

  • Software, including license costs

  • Hosting costs

  • Training costs

  • Miscellaneous team expenses, such as additional office supplies, team lunches, travel costs, and the price of any tools you may need

These costs may be one-time costs, rather than per-sprint costs.

Creating a self-funding agile project

A big benefit of agile projects is the capability to have a self-funding project. Scrum teams deliver working functionality at the end of each sprint and make that functionality available to the marketplace at the end of each release cycle. If your product is an income-generating product, you can use revenue from early releases to help fund the rest of your project.

For example, an e-commerce website may generate $15,000 a month in sales after the first release, $40,000 a month after the second release, and so on.