Kanban Estimation – Tools & Best Practices

Kanban estimation is a topic that comes up frequently amongst new Kanban users. Do you estimate effort in Kanban as you do in other project management tools? Which metrics should you use? And where to start?

This post aims to walk through all the basics you need to know about Kanban effort estimation and planning. From why you need it to which metrics you’ll typically want to estimate – including some examples of how to do it in Teamhood. 

Need more information about Kanban first? Check out our other Kanban resources.

Why do we need to estimate in Kanban?

Just as with any other project management tool, estimation is useful in Kanban. Indeed, some would say it is essential. The reasons are simple. Managing any project successfully means forecasting accurate estimates of when you can expect that project to be completed. As well as how long it will take overall, and how much that is likely to cost. 

Kanban estimation planning is needed to satisfy external clients and/or your internal stakeholders, who will want to know when to expect a project to be completed and how much to budget for it.

Take an example of a public project – for example, the setting up of a new operating system at an airport or a hospital. In such projects, even large sections of the press and the public will want to know when to expect the project to be completed – and the negative PR consequences of getting it wrong are both obvious and significant! Thus successful estimation or forecasting is crucial.

Projects run using Kanban are just the same and need to be estimated as well. The question is how to do this effectively. 

In short, we estimate in Kanban so that we know how much work is involved in a project, roughly how long it will take, and make sure to assign enough resources. This allows us to forecast when a project is likely to be finished and produce a release plan for our stakeholders – both internal and external. 

How to use estimation in Kanban

Most Kanban effort estimation is done via metrics that track the previous performance of the team. This way, we can base our forecast on what happened in the past and be more sure of its accuracy. The metrics usually include lead time, cycle time, throughput, and WIP. They are discussed in more detail a little further down in the post. And now, let’s see how to start Kanban estimation if you have no previous data to analyze.

There are certain steps you can use to create an initial Kanban effort estimation. This is a process that takes practice to master but is simple in principle if you know where to start. Here are the major steps you need to follow:

• Step 1: Determine the question or statement that you want to estimate
• Step 2: Create a visual Kanban estimation of this statement using Kanban cards
• Step 3: Create a backlog and list all the tasks 

• Step 4: Prioritize all the tasks in order of urgency – doing this will create your release plan
• Step 5: Estimate how much time each task will take according to what’s needed – this will give you your overall project time estimate

When estimating, these are the important questions you’ll need to keep in mind:

• What skill sets and skill levels do you have within your team?
• How are those likely to affect how long each task will take?
• Which risk factors could delay tasks or the project as a whole – eg. budgetary limitations, changing business priorities, changes in senior management, etc.?
• How will you decide when a project is complete?

Once you’ve considered all these factors, you’ll be able to come up with rough project estimation. To go into more accurate detail, however, you’ll need to delve into more specific metrics and get some data on how your team operates.

Here are the metrics commonly used in Kanban.

Kanban effort estimation metrics

Kanban offers a way for teams to organize and track project progress on a visual task board. In keeping with Agile ideas, Kanban metrics are used to track your team’s progress and are collected during a workflow to evaluate performance as you go, allowing you to adjust and improve performance during a project. 

As a result, measuring metrics in Kanban is a dynamic process typically carried out on a daily and weekly basis. 

1. Lead time

Lead time in Kanban is the amount of time taken from the moment a request is made – ie, enters the backlog – to the moment it is completed. The lead time can refer to an entire project or an individual task. However, it is most commonly used as an average number for a certain period of time.

The quick version of lead time can be calculated by taking the time the request is made and subtracting it from when the final result is delivered. It is primarily important as a measure of client satisfaction – or the satisfaction of internal stakeholders. Letting them know how long they have to wait for a request to be executed.

As a forecasting metric, average lead time gives us a good idea of how long we will have to wait for a request to be fulfilled. By knowing the average we, are able to assess the size of the request and give a forecast on when it will be done.

2. Cycle time

Cycle time is the average actual time it takes for the team to complete an item from the time they started working on it. This Kanban estimation metric is measured from the start to the end of a task. Again, this metric can be calculated for individual tasks, or the entire project, but is most commonly used as an average for each iteration.

Cycle time is often used in combination with lead time to give a better understanding of how long tasks will take in Kanban projects. It also allows us to measure internal productivity and understand when issues start to appear within the process. By comparing the difference between lead and cycle time, the team can also determine how long requests will have to sit in the backlog before the start of work.

By measuring cycle time, you can more accurately estimate and forecast the time required to complete the work that has already been started or scheduled. Thus giving your stakeholders more accurate information.

3. Throughput 

The third metric used in Kanban estimation, Throughput refers to the rate at which a company produces or processes its products or services. In terms of projects, it is typically used to reference the number of units passing through a process in a specific period, usually hours, days, or weeks.

You would typically measure this in terms of the number of cards that pass through your Kanban board during a specific timeframe, eg the life of a project, or over the course of a month. 

Knowing, for example, how many items your team completes in a month, allows you to forecast how many of the backlog items they will be able to go through. In combination with the cycle time, this metric also allows for estimating when will the project be completed.

4. Limiting the work in progress

Work in progress or WIP limits are not a Kanban estimation metric. It is a tool used to control the process of the team and ensure that the previously mentioned metrics are as accurate as possible.

The idea here is very simple – there is a limit on how many items can be added to the work-in-progress column on your Kanban board. Usually, this number equals the number of people in your team. This way, each team member can only work on 1 item at a time and cannot switch between tasks, or leave something unfinished. Only when the previous item is completed, can they take a new item.

This serves in ensuring there is focus on what needs to be done, the issues are detected and solved early, and the Kanban effort estimation metrics are more accurate.

Ready to start using Kanban estimation in your projects?

Learning how to estimate goals and measure progress is vital to successfully using Kanban in project management. Now you have a good sense of which metrics others typically use to measure success and how to estimate accurately using Kanban. So, maybe you’re ready to get started trying Kanban in your organization? 

Teamhood’s Kanban system contains several unique features and benefits not seen in other Kanban tools. Find out more about how Teamhood’s flexible Kanban system works, or book a demo to see how it could work for you.

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