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MoSCoW Rules: A Quantitative Expose
- 2. Agenda • Brief introduction to MoSCoW Rules • Importance of the quantitative analysis • Assumptions made • Quantitative (Monte Carlo) results • Conclusions • Q&A 2022 © Eduardo Miranda 2
- 3. MoSCoW Rules • A feature development prioritization mechanism where each of them is assigned to one of four categories: Must Have, Should Have, Could Have, Won’t Have (this time) based on user preferences and technical dependencies. Typically a constraint of 60/20/20% of the available budget is allocated to each of the first three categories • By not starting work in a lower preference category until all the work in the more preferred ones have been completed, the method effectively creates a buffer or management reserve of 40% for the Must Have features, and of 20% for those in the Should Have category. These buffers increase the confidence that all features in those categories will be delivered by the project completion date • In 1994, D. Clegg and R. Baker proposed the classification of requirements into Must Have, Should Have, Could Have and Won’t Have. The classification was made on the basis of the requirements’ own value and was unconstrained, i.e. all the requirements meeting the criteria for “Must Have” could be classified as such • In 2006, the DSDM Consortium, now the Agile Business Consortium, published the DSDM Public Version 4.2 establishing the 60/20/20% recommendation. The current formulation of the MoSCoW prioritization rules is documented in the DSDM Agile Project Framework 2022 © Eduardo Miranda 3
- 6. Importance of the quantitative analysis • Under MoSCoW rules the project scope is variable – Contracts will include price incentives/penalties contingent on deliveries – Employee rewards must be aligned with releases’ completion 2022 © Eduardo Miranda 6
- 7. To calculate incentives or penalties, the supplier must take into consideration the probability of successfully delivering (PoD) all the features in a category • Must Have – By definition the probability of delivering all features in this category must be close to 1 – 𝑃𝑜𝐷 𝐸𝑓𝑓𝑜𝑟𝑡 𝐵𝑢𝑑𝑔𝑒𝑡 90% • Should have – Features in this category should have a fair chance of being delivered – 𝑃𝑜𝐷 𝐸𝑓𝑓𝑜𝑟𝑡 𝐸𝑓𝑓𝑜𝑟𝑡 𝐵𝑢𝑑𝑔𝑒𝑡 50% • Could have – Features that the project could deliver within the defined time box if everything went as expected, i.e. if there were no hiccups in the development of features assigned higher priority – 𝑃𝑜𝐷 𝐸𝑓𝑓𝑜𝑟𝑡 𝐸𝑓𝑓𝑜𝑟𝑡 𝐸𝑓𝑓𝑜𝑟𝑡 𝐵𝑢𝑑𝑔𝑒𝑡 2022 © Eduardo Miranda 7
- 8. Contracting example using MoSCoW rules Budget = 4,000 hrs.; Must have = 2,400 hrs.; Should have = 800 hrs.; Could have = 800 hrs. Hourly cost = 100$, Desired margin = 30%; Reserve & contingency for firm fix price contract = 20%, no margin on R&C 2022 © Eduardo Miranda 8 Project delivers Firm Fix Price Firm price with incentives Client pays (K$) (1) Profit (%) (2) Firm (base) price (K$) (3) Incentive (K$) (4) Probability (5) Client pays (K$) (6) Expected profit (%) (7) Must have 600 [0, 50]% 400 0 1 400 32.5% Should have 160 .5 560 Could have 200 .25 600 (1) 𝑃𝑟𝑖𝑐𝑒 𝐵𝑢𝑑𝑔𝑒𝑡 𝐷𝑒𝑠𝑖𝑟𝑒𝑑𝑃𝑟𝑜𝑓𝑖𝑡 𝐶𝑜𝑛𝑡𝑖𝑛𝑔𝑒𝑛𝑐𝑦 (3) Business decision covers fixed cost (2) 𝑃𝑟𝑖𝑐𝑒 𝐴𝑐𝑡𝑢𝑎𝑙𝐶𝑜𝑠𝑡 1 (4) Business decision amounts must satisfy equation (7) (5) Assumed probabilities. We’ll learn how to calculate them on this presentation 𝐼 𝑃 𝐼 𝑃 𝐼 𝑃 𝐵𝑢𝑑𝑔𝑒𝑡 𝐷𝑒𝑠𝑖𝑟𝑒𝑑𝑀𝑎𝑟𝑔𝑖𝑛 (7) (6) 𝑃𝑟𝑖𝑐𝑒 𝐵𝑎𝑠𝑒𝑃𝑟𝑖𝑐𝑒 𝐼𝑛𝑐𝑒𝑛𝑡𝑖𝑣𝑒
- 11. How much certainty do the 60/20/20% allocation give us? Underestimations of up to 50% Underestimations of up to 100% Underestimations of up to 200% Independent efforts Correlated efforts (r = 0.6) Independent efforts Correlated efforts (r = 0.6) Independent efforts Correlated efforts (r = 0.6) Low confidence estimates Typical estimates Low confidence estimates Typical estimates Low confidence estimates Typical estimates Low confidence estimates Typical estimates Low confidence estimates Typical estimates Low confidence estimates Typical estimates Must Have 100% 100% 100% 100% 98.9% 100% 74.0% 96.4% 1.3% 70.5% 26.9% 59.8% Should Have 50.2% 100% 49.9% 88.7% 0 39.7% 15.6% 50.3% 0 0 4.0% 20.5% Could Have 0 0 0 20.5% 0 0 0 8.6% 0 0 0 3% 2022 © Eduardo Miranda 11 Good protection Some protection Insufficient protection
- 12. Under what circumstances? • Confidence on the estimates – Low confidence to establish worst case, useful to calculate maximum exposure – Typical estimate, allows for the possibility of overestimations, useful to calculate nominal risks, penalties and incentives • Correlated efforts – Independent variations – All the efforts tend to drift in the same direction as consequence of a common driver • Non dominant features – All features require more or less the same effort • Number of features – There are at least 5 features in each category 2022 © Eduardo Miranda 12
- 16. Why 60/20/20%? • Probably based on experience • Advantages – It is simple – Doesn’t look as bad as 50% – Provides more protection than 70% 2022 © Eduardo Miranda 16
- 18. Summary • MoSCoW Rules offer a simple, effective and efficient prioritization mechanism capable of providing ample protection against underestimations of up to 100% to the Must Have features and a fair protection for the Should Have up to a 50% underestimation level • To achieve the above mentioned level of protection a category must consist of 5 or more, with no feature requiring more than 25% of the effort allocated to the category • The 60, 20, 20% allocation seems to be the “Goldilocks” solution, balancing predictability with level of ambition 2022 © Eduardo Miranda 18
- 26. MoSCoW RULES: Example Feature Estimate Dependencies A 20 B, C B 10 C 20 D 5 E F 5 G 20 H 10 J, K I 15 J 12 K 8 E 6 L 10 • Sponsor order of preference is: F, D, A, G, K, E, L, J, H, I, B, C • Total budget (time box) = 180hrs • Project management, analysis, design & technical work = 60hrs • Development budget = 120hrs • Find the: – “Must Have” set – “Should Have” set – “Could Have” set – “Won’t Have” set 2022 © Eduardo Miranda 26
- 27. MoSCoW RULES: Establish budget for each set Feature Estimate Dependencies A 20 B, C B 10 C 20 D 5 E F 5 G 20 H 10 J, K I 15 J 12 K 8 E 6 L 10 • Sponsor preference: F, D, A, G, K, E, L, J, H, I, B, C • Development budget = 120hrs • Calculate the initial effort to be devoted to each feature set: – 𝐸𝑓𝑓𝑜𝑟𝑡 120 0.6 72 – 𝐸𝑓𝑓𝑜𝑟𝑡 120 0.2 24 – 𝐸𝑓𝑓𝑜𝑟𝑡 120 0.2 24 2022 © Eduardo Miranda 27
- 28. MoSCoW RULES: Must and Should Have Feature Estimate Dependencies A 20 B, C B 10 C 20 D 5 E F 5 G 20 H 10 J, K I 15 J 12 K 8 E 6 L 10 • Sponsor preference: F, D, A, G, K, E, L, J, H, I, B, C • Select Must Have features – 𝐸𝑓𝑓𝑜𝑟𝑡 120 0.6 72 • Select Should Have features – Update the ShouldHave effort with the remnant of the MustHave effort – 𝐸𝑓𝑓𝑜𝑟𝑡 24 6 30 2022 © Eduardo Miranda 28 1 Select F 72 ‐ 5 = 67 2 Select D, E 67 ‐ 11 = 56 3 Select A, B, C 56 ‐ 50 = 6 4 Select G 30 ‐ 20 = 10 5 Select K 10 ‐ 8 = 2
- 29. MoSCoW RULES: Could and Won’t Have Feature Estimate Dependencies A 20 B, C B 10 C 20 D 5 E F 5 G 20 H 10 J, K I 15 J 12 K 8 E 6 L 10 • Sponsor preference: F, D, A, G, K, E, L, J, H, I, B, C • Select Could Have features – Update the CouldHave effort with the remnant of the ShouldHave effort – 𝐸𝑓𝑓𝑜𝑟𝑡 24 2 26 2022 © Eduardo Miranda 29 6 Select L 26 ‐ 10 = 16 • Won’t Have features: H, I • Finally – “Must Have” = {F, D, E, A, B, C} – “Should Have” = {G, K} – “Could Have” = {L, J} – “Won’t Have” = {H, I} 7 Select J 16 ‐ 12 = 4