What is the primary purpose of tracking velocity for each iteration in an agile team?

Tracking velocity for each iteration serves multiple purposes, but the primary focus is on improving the team's ability to make informed estimates and commitments for future iterations. Velocity, measured as the amount of work completed in a given iteration (often quantified in story points), provides a historical record of the team's performance. By analyzing this data, the team can identify patterns in their productivity, understand their capacity for upcoming iterations, and refine their backlog prioritization.

This insight into velocity enables more realistic planning, helping the team to establish achievable goals based on their past performance. When teams consistently track and reflect on their velocity, they can adapt their work processes, improve efficiency, and ultimately enhance team predictability. As a result, making well-informed estimates and commitments becomes a smoother, more evidence-based practice, which is a cornerstone of agile methodologies.

While other choices may touch on valid aspects of agile project management, they do not capture the core strategic advantage that comes from the regular evaluation of velocity data. For example, reporting accomplishments to governance or providing status updates may be important for stakeholder communication, but these do not contribute directly to the iterative improvement of team practices and planning that comes from understanding velocity.