A burndown chart is a graphical representation of outstanding work versus time and is useful for predicting when all of the work will be completed. A burndown chart can be created by estimating the required effort to complete a project and tracking daily task progress. For the duration of the project, the team must also determine its actual effort against the estimated effort and plot the dataset to evaluate progress. A burndown chart is simple to understand and provides clarity on project scope and progress. However, the accuracy of a burndown chart relies on estimations invariably influenced by cognitive biases. In poorly defined projects, the quality of the resultant chart will be similarly poor.
Understanding a burndown chart
Successful project managers realize the importance of statistics and graphical illustration tools in facilitating communication and collaboration amongst team members.
One of the more popular tools is the burndown chart, favored because of its simplicity and effectiveness.
Broadly speaking, a burndown chart displays how much work remains to be completed on the y-axis with the number of days since work began on the x-axis.
By comparing its actual progress with an ideal rate of progress, the project team can determine whether it is on or behind schedule.
In agile software development methodologies such as Scrum, these charts graphically illustrate the speed with which a team is working by plotting user stories against time.
Scrum is a methodology co-created by Ken Schwaber and Jeff Sutherland for effective team collaboration on complex products. Scrum was primarily thought for software development projects to deliver new software capability every 2-4 weeks. It is a sub-group of agile also used in project management to improve startups’ productivity.
After the successful completion of a user story, the chart is updated.
The chart can also record the pace of a team โ otherwise known as velocity โ and predict its performance.
Creating a burndown chart
Though the burndown chart can be used in almost any context, it has seen renewed interest in agile software development.
With that in mind, we will now detail the steps required to complete a burndown chart:
Estimate effort
What is the ideal baseline for using the available hours throughout the sprint?
In most cases, this is determined by dividing the available hours by the number of days the sprint will run across.
For a sprint of 80 hours over 8 days, the effort required is 10 hours per day.
Team leaders must then quantify the burndown as a daily running total with 80 hours remaining on Day 0, 70 hours remaining on Day 1, 60 hours remaining on Day 2, and so forth.
Track daily progress
Daily progress is then captured in the table against each daily task.
Note that the hours assigned to each task are the estimated effort required for completion and not the actual effort.
Determine the actual effort
At the conclusion of each day, the total remaining effort must be calculated by subtracting the actual effort from the running total.
As the project progresses, the actual effort will fluctuate above and below the estimated effort.
These disparities depend on how accurately the initial project work was estimated and whether individuals can work effectively as a team.
Plot the final dataset
Using the data from step three, the burndown chart itself can be created by using a simple application such as Microsoft Excel.
Once plotted, the project team can compare planned and actual progress.
Benefits and limitations of burndown charts
Benefits
The most obvious benefit of a burndown chart is that it provides a clear and visible progress update to all members of the project team.
The chart is easy to understand, which increases employee motivation and buy-in.
Burndown charts also help the project team deal with small issues before they become large problems.
By tracking actual progress against ideal progress, the conversation is naturally steered toward the project and any obstacles to its timely completion.
Limitations
The effectiveness of the burndown chart as a project management tool relies on the accuracy of time estimates.
Unfortunately, these estimates are notoriously inaccurate because they are influenced by cognitive biases.
In a sprint, where story points deal with complexity and relative sizing, the problem isnโt as pronounced.
But the cognitive biases associated with estimation remain. If a team overestimates project time requirements, progress will appear on track or ahead of schedule.
Conversely, if a team underestimates time requirements, the chart will suggest they are behind schedule.
What’s more, the charts also show progress without providing clarity on whether the team is working on the right thing.
In poorly defined projects, burndown charts do not reflect how close the team is to completing the work.
This can lead to exaggerated or unrealistic expectations and team disunity.
Burndown Chart Vs. Burn Up Chart
Whereas in a Burndown Chart, you can track how much is left for the completion of a project, on the converse, in a burn-up chart, you can see the amount of work that has been put on that project’s task.
Thus the two tools combined can give you a much more complete understanding of the project’s completion and development.
Burndown Chart, Scrum, And Agile
Since Burndown charts are a way to track the progress of a project, that also fits nicely into Scrum.
Indeed, a Burndown chart enables teams to evaluate the efforts needed for specific tasks and track their completion as the project moves forward.
It’s critical that for a burndown chart to be effective in Scrum, it needs to fit into an agile mindset.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
