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Agile methodology relies and works upon relative estimates rather than absolute estimates.
What is an absolute estimate ?
Absolute estimation is derived without comparison. For instance, there are 10 tasks in the sprint backlog and how much time will it take to complete those tasks in total? . it is based on one's own judgement.
What is a relative estimate ?
Agile methodology completely relies upon relative estimate. Relative estimation is derived as a result of comparison. For instance, there are 10 tasks in sprint backlog and it takes 2 hours to complete a task , how much time will it take to complete 5 tasks?.
How does a relative estimate work ?
In the sprint planning, the developers and the scrum masters prepare the sprint backlog as a subset of the product backlog from the product owner and decide to work on them in the upcoming sprint. It is first important for them to find a reference user story. All the user stories are measured based on the reference user story. The complexity, uncertainty and the time taken for a reference user story further affects all the other user stories.
An example :
There is a group of wood cutters and they chop the wood from a forest .
The time taken and uncertainty faced to chop wood from one tree can be taken as a reference user story upon which other user stories can be estimated.
There can be many other tasks apart from chopping the wood. The task of making wood carvings from the chopped wood can have a higher estimate when compared to chopping the wood based on the risk factors and the time required to complete.