"I got quarters in my loafers..."

Loafers

Loafers

"...tryin' to fight inflation when it only used to take a cent". Oh, the games people play with story points.  Like many Agile techniques, estimating with story points can be very effective when used correctly. However, story points are easily misused and their misuse can lead to some serious disfunction. The purpose of estimation using story points is to measure capacity. Over time, a team's velocity may increase due to a variety of factors, but not all of these are good. One common mistake I see is point inflation. The inflation is generally driven from misplaced emphasis on story points as a measure of productivity rather than capacity. The thinking here is that more story points means more productivity. This thinking can result in a gaming of the estimation to drive a higher number of points per sprint. Gaming the story points this way has the negative impact of reducing the effectiveness of velocity to measure capacity.

Another common mistake is to try to compare velocities across multiple teams. Managers sometimes misunderstand the concept of velocity and try to compare one team's performance to another teams using velocity. Since the meaning of the points are determined by the team, it is rather trivial for one team to simply boost the size of their estimates to "outperform" the other teams.  Remember, velocity is a measure of capacity, not performance.

A related problem to comparing velocities is an attempt to roll up multiple teams' velocities to a single "all teams" velocity.  Since each team has a different concept or understanding of how much effort a point represents (after all the ''size" of a point is  unique to a given team), a rollup of different teams' velocities is not unlike adding apples and oranges.  They simply are not the same thing.

You can help avoid these common mistakes by educating managers and other stakeholders on the role of story points in measuring capacity.