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In Scrum, velocity is how much product backlog effort a team can handle in one sprint. This can be estimated by viewing previous sprints, assuming the team composition and sprint duration are kept constant. It can also be established on a sprint-by-sprint basis, using commitment-based planning.
Once established, velocity can be used to plan projects and forecast release and product completion dates.
How can velocity computations be meaningful when backlog item estimates are intentionally rough? The law of large numbers tends to average out the roughness of the estimates.