Question 72 - PSM II discussion

Short Scrum is a framework for delivering value to customers and stakeholders in an iterative and incremental way. Scrum does not prescribe how project budgeting and financial forecasting should be performed, but it does provide some principles and practices that can help with this process.

One of these principles is that each Sprint should produce a potentially releasable product Increment that delivers value and meets the Definition of Done. This means that several Sprints may be funded as a single release, with the result of each Sprint being releasable product12. This allows the Product Owner to decide when to release the product based on the feedback from the customers and stakeholders, and the market conditions.

Another principle is that Scrum promotes transparency, inspection, and adaptation. This means that the budgeting and forecasting process should be revisited as frequently as each Sprint to ensure value is being delivered for the investment spent13. This allows the Scrum Team to inspect the outcomes of the delivered Sprint Increments, compare them with the expected benefits and costs, and adapt the product backlog and the release plan accordingly.

Scrum does not align with traditional accounting practices that require fixed scope, cost, and time. However, this does not mean that Scrum Teams do not need a budgeting process or that they only need to cover the run cost (time and materials) of the Scrum Teams. Scrum Teams still need to estimate the size and value of the product backlog items, forecast the delivery date and cost of the product or release, and track the actual spending and revenue of the product or release43. The difference is that these estimates and forecasts are based on empirical data from previous Sprints, rather than on upfront assumptions or guesses. They are also subject to change as new information emerges or new requirements arise.

Scrum Guide 2020, section ''The Sprint'', ''The Increment'', ''Empiricism''.

Tips for Effective Agile Budgeting and Forecasting | Toptal, section ''Establish Context and Set Expectations'', ''Budget for Value''.

Project forecasts and budgets | Microsoft Learn, section ''Project forecasting''.

Planning and Budgeting in Scrum Projects - PMHut, section ''Budgeting in Scrum Projects''.