Hi Steve,
"Companies that want to capitalize" is Greg's key phrasing here. This isn't
about the company mistrusting people, this is about helping a company
perform more accurate financial reporting for tax or public accounting
reasons. Some labor cost is "capitalized" (investments that will reap
returns over several years) and other labor is "operational expense" (costs
that contribute only to short term gains). There are tax and financial
reporting benefits that accrue when you more accurately classify. For
public companies, more accurate reporting typically improves market trust.
I may be misunderstanding your comments below, but it seems like you are
saying that I am recommending that people track time. I am definitely not.
The article I wrote shows people how to capitalize work with high levels of
verification, even mixed-mode work, without having to track actuals at all.
The approach I describe passed financial muster from Ernst and Young, a
highly regarded financial auditing group, and its greater accuracy and
verifiability allowed us to capitalize work that would otherwise would be
"conservatively" thrown into the "expense" bucket.
So, in answer to Greg's question, Yes, I have definitely heard of companies
demanding that teams track actuals in order to better capitalize work, but
it is not a good idea. When I worked at Citrix Online, there were people
demanding that we track actuals for capitalization, and I invented the
approach I describe to avoid it. Typically "actuals tracking" requires
engineers to estimate their activities weekly, on time-cards, as hourly
estimates of time. The result is guess-work and less accurate, in my
opinion, than proportionally allocating team-team by relative story point
proportion. By forcing engineers to track actuals, you distract engineers
from focusing on the engineering problems, and thus sacrifice productivity.
Our auditors seemed to agree. After running this way for two quarters, they
realized how our approach was highly verifiable, that every team member
could verify the capitalization we were reporting. They were extremely
happy with us, quarter after quarter, because we could point to all the
data, and we provided clear guidance on our process for gathering that data.
See: http://senexrex.com/agile-capitalization/
Dan Greening, PhD
Managing Director, Senex Rex LLC, http://senexrex.com
Post by s***@gmail.comI see it mandates as a time entry system all the time. The shops where I
see that are usually somewhat challenged in the trust department. I
havenât ever seen it in a mature team, and my anecdotal experience makes me
feel that a team with that kind of requirement probably wonât make it to
maturity from an Agile perspective.
From your example, the developer would enter the 3 hours of effort, then
be required to prove they did something productive with the other three
hours by entering some other task into said system. It turns into a game
of âjustify my paycheckâ and almost always results in overinflated
estimates. Or at least that has been what Iâve been observing.
Steve
*Sent:* âMondayâ, âDecemberâ â16â, â2013 â4â:â06â âPM
http://www.infoq.com/articles/agile-capitalization
Hopefully, that helps.
Dan R. Greening â http://dan.greening.org
Post by Greg RobinsonCompanies that want to capitalize their expenses for building software
need their development teams to track time they spend on building and
testing software. Has anyone heard of a company requiring their teams to
track the time they spend as part of the tasks in the Agile Project
Management Tool being used?
For example, if a user story consists of 5 tasks and task1 was estimated
at 6hours but it only took 3 hours to complete, than the developer is
required to enter the actual effort of 3 hours into the tool for time
tracking purposes.
I can understand tracking the estimated vs actuals over the course of a
sprint or two in order to help improve team agility and estimation
practices, but I've never heard of it being mandated as a time entry
system. This can be a problem particularly for mature teams that don't use
tasks or task hours.
What have you seen work? What downsides do you see to this?
Looking for comments or thoughts.
Thanks.
Greg