When Agile Estimation becomes pointless

If a team has to deliver a certain amount of functionality by a certain date, then the act of estimation becomes an act of commitment. The team has essentially committed to cost, schedule, quality and scope. There are no levers left. In such a situation, velocity becomes a target rather than just a measurement. Targeting velocity makes points based estimation a charade. The team is better off estimating in real days in this case. It helps the cause of commitment. Points based estimation is useful when you agree to the following:

1. Plan the story list for a release with only about 70% must-have functionality and the rest as negotiable. This implies it is potentially okay to release (go into production) with just that 70% functionality.
2. By definition, estimates are approximations. Software estimates are more so.
3. It is counterproductive to insist that your IT vendor/team deliver x points of functionality by date y. Scope negotiation does not mean x remains x. Yes, sometimes only the contents of x need change. At other times, x may become x ± delta. This is not a rip-off. It doesn't make business sense for your IT vendor to rip you off because you won't give repeat business if you are ripped off. Without repeat business, your IT vendor is likely to become uncompetitive because the cost of new business development is very high.

"Embrace change" is a two way street. IT delivery team should embrace changes to requirements and priorities. Clients should also embrace changes to scope when delivery work proceeds at a different pace than originally expected.