Understanding Velocity Standard Deviation

Velocity Standard Deviation Explained

Standard deviation measures how spread out your velocity data is. A low standard deviation means your team delivers consistently; a high one means output varies significantly sprint to sprint.

Calculating Standard Deviation

Sprints:  24, 28, 22, 26, 30
Mean:     26
Differences: -2, 2, -4, 0, 4
Squared:  4, 4, 16, 0, 16
Variance: (4+4+16+0+16) / 5 = 8
Std Dev:  sqrt(8) = 2.83

Interpreting the Number

Std Dev / Mean Ratio	Interpretation
< 10%	Very predictable; excellent for forecasting
10-20%	Normal variation; reliable planning
20-30%	Moderate variation; use conservative estimates
> 30%	High variation; investigate root causes

What Causes High Standard Deviation?

1. Inconsistent team capacity -- people frequently pulled to other projects
2. Poor estimation -- stories are wildly over or under-estimated
3. External blockers -- dependencies causing unpredictable delays
4. Unclear requirements -- stories requiring rework mid-sprint
5. Tech debt spikes -- unplanned infrastructure work

Using Std Dev for Forecasting

The forecast range is calculated as:

Optimistic:    (mean + std_dev) x number_of_sprints
Expected:      mean x number_of_sprints
Conservative:  (mean - std_dev) x number_of_sprints

This gives stakeholders a range rather than a single unreliable number. Teams with lower standard deviation provide tighter, more credible ranges.