"I generally agree with Peter's points..., except that estimating any development effort in hours is a mistake, plain and simple. You are mistaking 'precision' with 'accuracy' in that case, and any estimation is bound to be incorrect.I think there are two perspectives here.
"What you need to do is to measure the team's *actual* output, and feed that back into the measurements as the velocity. These measurements need to begin as soon as development starts, and need to be made continuously. That's the only way to introduce any accuracy into your estimates."
On the one hand, I'm totally in agreement with Dave that estimating in story points as an abstract unit is the right way to go and with his observation about the importance of measuring the team's actual output.
But on the other hand, Project Management is always about the Art of the Possible. Getting the project to a satisfactory conclusion under the circumstances, particularly if you are rescuing a project in crisis. I have seen a number of attempts to a implement a pure agile approach fail due to lack of flexibility on the part of the Agile champions or due to resistance from the team.
So we have stick to our principles: Continuous Improvement, Self-organization, Commitment Driven. Taking exactly what you can eat. Eliminate Impediments. These Principles define the practices at the Heart of Scrum. The Plan - Do - Review - Improve Sprint Cycle. A fixed length Sprint with a fixed (or at least predefined) team. A negotiated Sprint Contract between Product Owner and Team. A Definition of Done. If you're not doing these things, you're not doing Scrum.
We can comprimise on practices if we are true to our principles and to the heart of Scrum. User Stories are a practice. Story Points are a practice. We can use them or not if they make sense for our project. (They are also very good practices, and where I haven't used them from the beginning, I have migrated to them as the projects moved forward).
Once you start doing Scrum, the Scrum Master can start prodding in the team to adopt the Agile practices that fully unleash their potential. But I've written why a coach is more effective than a bulldozer and how it took the Team exactly one meeting to raise the contradiction of being told what to do while being told they are self-organizing. So compromise and accommodation is part of the game.
Which brings us to the project at hand. But that is tomorrow's post.