How to Count Unfinished Stories for Velocity

First, let me point out that I'm generally in favor of an all-or-nothing stance toward counting velocity: if a story is done (coded, tested, and accepted by the product owner), the team earns all the points, but if anything on the story isn't done, they earn nothing. At the end of an iteration, this is the easiest case to assess: If everything is done, they get all the points; if anything is missing, they get no points. If the team is likely to take on the remaining portion of the story in the next iteration, this works well. Their velocity in the first iteration is a bit lower than expected because they got no credit for partially completing a story. In the second iteration, however, their velocity will be higher than expected because they'll get all of the points, even though some work had been completed prior to the start of the iteration_ This works well as long as everyone remembers that we're mostly interested in the team's average velocity over time, not in whether velocity jumped up or down in a given iteration.

Agile Estimation and Planning - Mike Cohn

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