How fast are you getting to where you’re going?

What is the difference between productivity and velocity?  Productivity is the rate of production using a set of inputs for a defined period of time.  In a typical IT organization, productivity gets simplified to the amount of output generated per unit of input. Function points per person month is a typical expression of productivity.  For an Agile team, productivity could very easily be expressed as the amount of output delivered per time box.  Average productivity would be equivalent to the team’s capacity to deliver output.  Velocity, on the other hand, is an Agile measure of how much work a team can do during a given iteration.  Velocity is typically calculated as the average story points a team can complete. Conceptually the two concepts are very similar, the most significant differences relate to how effort is accounted for and how size is defined.

The conventional calculation for IT productivity is:

Function points, use case points, story points or lines of code are typical size measures. Work in progress (incomplete units of work) and defective units generally do not count as “delivered.” Effort expended is the total effort for the time box being measured.

The typical calculation for velocity for a specific sprint is:

Note, as a general rule, both metrics are an average.  One observation of performance may or may not be representative.

The denominator represents the team’s effort for a specific sprint in both cases, however when using velocity the unit of measure is the team rather than hours or months. Average velocity of a team makes the assumption that the team’s size and composition are stable.  This tends to be a stumbling block in many organizations that have not recognized the value of stable teams.

The similarities between the two metrics can be summarized as:

• Velocity and productivity measure the output a team delivers in a specific timeframe.
• Both metrics can be used to reflect team capacity for stable teams.
• Both measures only make sense when they reflect completed units of work.

The differences in the two metrics are more a reflection of the units of measure being used.  Productivity generally uses measures that allow the data to be consolidated for organizational reporting.  While velocity uses size measures, such as story points, that are team specific. A second difference is convention. Productivity is generally stated as # of units of work per unit of effort (i.e. function points per person month), while velocity is stated as an average rate (average story points per sprint).  While there are differences, they are more a representation of the units of measure being used than the ideas that the metric represents.