Manage data for financial calculations

Financial calculations provide you with insights about the estimated and actual costs to deliver work items of various sizes, as well as show the cost of a story point from team and program perspectives. There are some settings that need to be configured at multiple levels of your Jira Align instance to ensure financial calculations are accurate. Additionally, understanding how settings and inputs that are stored to process financial calculations is helpful for determining why a financial calculation may not display an expected value.

• Important settings
• Baselined data
• Re-baseline data
• Data change examples

Important settings

Because the different layers of financial calculations feed into each other, it’s important to ensure that your settings and data are set up correctly at multiple levels.

Global

As an organization, portfolio and program leaders collaboratively agree upon the basis used for Estimation Conversion settings — the average number of story points that one team member delivers during a week. This allows portfolios within your organization to use different estimation methods while working from a common pivot point. While portfolios can each choose a different estimation system, the conversion of story points into 1 member week is a global setting.

Portfolio and program

Each portfolio will need to choose a costing method: Cost Center or Blended Rate. This value is one of the sources of how Team Cost per Sprint is calculated. Either option is the hourly cost of a team member, which is multiplied by sprint allocation levels. This setting is also a source for calculating hourly-based Accepted Spend. Admins can find this setting in Administration > Platform > Portfolio > Costing Method.

When Cost Center is selected, make sure that users are assigned to a cost center. Also ensure that cost centers have an hourly rate set, at Administration > Cost Centers.

When Blended Rate is selected, you will need to ensure that each program increment has a rate entered when it is created. Check the Blended Rate field under the Full Details section of a PI’s Details panel.

Team hours and allocations

Each team must set a value in the Burn Hours field found in a team’s Details panel. This is the max number of hours that team members are expected to spend each day on story/task work.

Kanban teams should enable the Auto-populate Estimate setting to use a consistent point value for calculating Spend per Point values. 

Both team types should also select an option in the Track By field, Points (default) or Hours. The selection will control how Accepted Spend is calculated: hourly-based or point-based.

Team members are allocated to task work in a sprint through one of two locations, depending on the type of team:

• Agile teams set task allocations on a sprint’s Details panel, through the Members tab:
  
• Kanban teams set task allocations on the team’s Details panel, after selecting the Allocations link:
  

Note: Users who are not part of the team, but then track time against a task in Align will be added to the team and sprint with 0% allocation. 

If you’re integrated with Jira, ensure that the Allow Jira to add users to team if they belong to an issue setting is enabled in your connector configuration. This will ensure that if a team member is allocated to Jira sprints that map to more than one simultaneous sprint in Jira Align, their allocation will be distributed evenly. This setting will also add users to a team in Align if they log time against a task in Jira. Those users will be added with 0% task allocation in the sprint and team. 

Work items

Depending on the work item type, different fields will need to contain estimates to generate financial values:

Capabilities and Epics

• Larger work items can span multiple program increments and can be worked on by more than one program. To ensure the rough, upfront Forecasted Spend value is as accurate as possible, ensure there are forecast estimates entered for each program and PI combination. You can enter these on the Forecast tab of a capability or epic’s Details panel, or by running a forecast on the Forecast page
  

Features

• Features need to be estimated in order to generate Estimated Spend values. Enter the estimate on the main tab of a feature’s Details panel.
  

Stories

• A story must be assigned to a sprint, as Spend per Point values are calculated based on what sprint a story is accepted in.
• A story needs to be accepted to be counted for Spend per Point and Accepted Spend values.
  Effort point estimates should be entered on a story before the sprint begins.
  

Baselined data

As you make progress over the course of multiple sprints and program increments, certain data is baselined, or stored, in order to preserve the historical cost of a team, sprint, or work item.

Forecasted Spend

Each combination of program and program increment that a capability or epic is assigned to has a forecast estimate that can be entered on the Forecast tab of the work item’s Details panel. This estimate is also called a program PI forecast.

At the end of a PI When a PI’s status is changed to Done, related program PI forecasts are multiplied by the current Program Spend per Point, generating a Forecasted Spend value for that program and PI combination. These values are stored.

Program PI Forecasted Spend values in an epic or capability are summed to generate the work item’s Forecasted Spend.

Estimated Spend

A feature’s estimate and the resulting Estimated Spend value are stored when a feature is accepted. At that time, the current Program Spend per Point from the primary program the feature is assigned to is used for the calculation.

If an accepted feature is moved backward out of the Accepted state, a new baseline will be taken when the feature is accepted again.

Sprints and stories

A team’s Team Cost per Sprint value is stored at 11:59pm on the last day of a sprint or anchor sprint. Kanban teams use anchor sprints found within a PI to store data. Inputs used to calculate Team Cost per Sprint and Team Spend per Point are also stored:

• Allocation percentages of team members
  • For agile team types, this is entered on the sprint’s Details panel
  • For kanban team types, this is entered on the team's Details panel
• Burn hours
• Cost center rates
• PI blended rate
• Number of days in the sprint
  • Number of days in an anchor sprint for kanban teams
• For kanban teams, number of stories accepted since the start date of the anchor sprint

The Accepted Spend value for a story is not stored. It is always calculated live, using the Team Spend per Point value from the sprint the story is currently assigned to (point-based), or the number of task hours logged against the story (hourly-based).

For example, if a story is assigned to Sprint A, and then accepted, the story’s point-based Accepted Spend will be displayed based on the Team Spend per Point value from Sprint A. If the accepted story is then moved to Sprint B, the Accepted Spend value will update, using the Team Spend per Point value from Sprint B.

Re-baseline data

Some data can be changed and stored anew, or re-baselined, through various updates. When an update is made that will cause data to be re-baselined, a warning message will display:

You can re-baseline the following data inputs to correct displayed financial values within a sprint or PI:

Affects Forecasted Spends

• Update a program PI forecast from the Forecast tab of an epic or capability’s Details panel to recalculate the Forecasted Spend related to that program and PI.

Affects Feature Estimated Spend

• Update an accepted feature’s estimate to re-baseline the Feature Estimated Spend
• If a Program Spend per Point value has been updated after a feature was accepted, you can have the Feature Estimated Spend recalculated by moving the feature back into an in-progress state, save, and then re-accept the feature.

Affects Team Cost per Sprint / Spend per Point values

• Allocations for team members working in an agile team’s sprint
• PI blended rates
• Cost center rates

Cost center rates can be re-baselined through the following steps:

1. Navigate to the Administration > Cost Centers page, and update the center’s Hourly rate field.
   
2. Next, open the Details panel of the program increment that contains the sprint(s) you want to update cost rates for, and select the Sync Sprints tab.
3. Under the Current Anchors section, click the gear icon to the right of the anchor sprint that you want to update rates for. A Manage Sprint panel displays.
   
4. Select the checkboxes to the left of each agile or kanban team you want to update, and then click the Reset Cost Rates button.
   

Data change examples

To further understand what changes may affect baselined values and financial calculations, consider the following examples:

Changing a feature’s estimate

Pre-conditions:

• Current Program Spend per Point = $500
• Feature’s estimate = 6 points
• Feature’s State = Accepted

Feature Estimated Spend = $500 * 6 = $3,000

If you then change the feature’s estimate to 11 points, data will be recalculated: $500 * 11 = $5,500.

A sprint ends after a feature is accepted

Pre-conditions:

• Current Program Spend per Point = $500
• Feature’s estimate = 6 points
• Sprints completed = Sprint 1, 2, 3, 4, and 5
• Feature’s State = Accepted during Sprint 5

Feature Estimated Spend = $500 * 6 = $3,000

Sprint 6 begins and ends. During that sprint, multiple teams saw a significant decrease in their velocities as they took on new work. When Sprint 6 ended, it resulted in the Program Spend per Point changing from $500 to $800.

This doesn’t result in any change to the Feature Estimated Spend, however, because Program Spend per Point was stored when the feature was accepted during Sprint 5.

To recalculate with the new Program Spend per Point of $800, you would need to move the feature back to an in-progress state, save, and then re-accept the feature. If this occurred during Sprint 6, the Estimated Spend would be updated: $800 * 6 = $4,800

Changing member allocations or rates

Pre-conditions:

• Current Program Spend per Point = $500
• Feature’s estimate = 6 points
• Sprints completed = Sprint 1, 2, 3, 4, and 5
• Feature’s State = Accepted during Sprint 5

Feature Estimated Spend = $500 * 6 = $3,000

Multiple team member allocations for Sprint 5 are set from 50% to 100% as contractors were hired full-time, or a PI’s blended rate was increased due to salary changes. Either of these changes results in the Program Spend per Point changing from $500 to $700, due to the increase of the Team Spend per Point from Sprint 5.

This results in the Feature Estimated Spend being recalculated: $700 * 6 = $4,200

Changing a portfolio’s cost method

Pre-conditions:

• Portfolio Costing Method setting = Cost Center
• Current Program Spend per Point = $500 (when calculated using a Cost Center rate)
• Current Program Spend per Point = $800 (when calculated using a PI blended rate)
• Feature’s estimate = 6 points
• Feature’s State = Accepted

Feature Estimated Spend = $500 * 6 = $3,000

An administrator changes the Administration > Platform > Portfolio > Costing Method setting from PI Blended Rate to Cost Center.

While the entered Cost Center rate would change the Program Spend per Point from $800 to $500 for future calculations, the stored Feature Estimated Spend is unchanged.