A Simple Guide to Successful Software Project Estimation

Quick Rundown: Do you know mastering software project estimation is one of the crucial business imperatives today? In this guide, we delve into the essentials of software project estimation, exploring its significance, and diverse methods. Read on to learn how accurate estimates can streamline your development process, and ultimately lead to project success.

It’s the ultimate objective of every software development service provider to deliver their projects on time and within budget. However, making this happen is a struggle for the development teams because expecting the exact cost or time required to develop software is like getting blood from a stone. Without any precise estimate, there are higher chances that your project might exceed your budget or lag behind the schedule, so what should you do? Well, this is where software project estimation comes into action.

Forecasting the future is impossible; however, certain practices can help you considerably with an accurate cost estimation like a pro!

Software project estimation helps managers estimate significant project parameters such as scope and expenses. Managers can then utilize these estimation approaches to provide clients with more accurate predictions and help them with the funds and resources they’ll need for the project’s success. Hence, a precise and successful software project estimation is essential as the market revenue is expected to reach USD 858.08 billion by 2028. A cutthroat competition everywhere!

In this blog, you’ll explore what software project estimation is, its importance, and various methodologies.

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Table of Contents

1. What is Software Project Estimation?
2. Why is Estimation Important?
3. Software Development Estimation Methods?
4. Guide to Your Software Project Estimation
5. Conclusion

What is Software Project Estimation?

Estimation in software engineering is a procedure that predicts the time and budget of a project. It involves more than just numbers; it includes understanding the experience needed to deliver quality software development services or the strategies employed to complete tasks efficiently.

The software project estimation process demands the use of complicated tools and up-to-date technical knowledge. It determines the completion of the hard work of the team.

Why is Estimation Important?

Software project estimation is important because it facilitates accurate planning and management of the project. This is done by identifying the project’s scope, timeline, and cost considerations, enabling businesses to predict finance inflows and outflows or ROI.

The software project estimation process demands the use of complicated tools and up-to-date technical knowledge. It determines the completion of the hard work of the team.

A properly estimated project should answer the following points:

• Duties – The details of the tasks; what needs to be done.
• Resources – The task force is also essential. Fetch the number of workers required to complete the project.
• Rate – The budget of the project. Where you need to pay, where discount would be deployed, software cost estimation, etc.
• Deadline – There should be an estimated deadline for the project.

Software Development Estimation Methods

Every company has its own way of handling software development project estimation. However, here are the three most popular methods which are tested and effective.

Overview Estimation of Software Development

In analogy estimation, the budget of the previous projects is verified and checked to set an approx. budget of the current project. After retrieving the past data, the location, the inflation rates, the budget is compared.

Minute Estimation

In this estimation process, a project is segregated into various parts. This helps to minutely manage the tasks, and it gets a lot simpler to handle. Lastly, the overall estimation is checked from the very last step to the first to get an accurate estimation of the software project management.

PRO Estimation

P stands for Pessimistic, which derives the best situation, R stands for Realistic that derives the rational situation, and lastly, O stands for Optimistic that derives the worst situation of a software project. These triple estimation situations add the advantage to not go wrong by any chance. It is a highly preferred estimation by the companies as it gives better opinions for proceeding with the project.

Guide to Your Software Project Estimation

In software project estimation or software costs estimation, people often overlook certain hidden costs that are involved during various stages of the lifecycle. The focus generally narrows down to the cost of software development, which is significant — however, it is just one of the stages in the process (just like a soup or starter).

Hence let’s delve into different phases of a software project and the costs involved with those phases.

Need Analysis: The Hunger

As a decision-maker, you must invest in the ‘need analysis’ phase. Let’s not forget that software systems are expected to address business need. Better the need identification and analysis, the higher the chances of software systems implemented to address the needs.

This activity involves time and commitment from various stakeholders of the business, including target end-users of the system. Having brainstorming workshops & surveys with these stakeholders will help pinpoint the pain areas of the users/processes and define the solution approach more effectively to get the accurate time estimation for custom software development. The cost headers in this phase include:

• Time of stakeholders (Project Sponsor & End Users) in brainstorming workshops and surveys.

The majority of the software implementations fail simply because either ‘need analysis’ was not done or key stakeholders were not taken into confidence before finalizing the project scope.

Project Definition: The Menu

After need analysis, quality efforts need to be spent on clearly outlining the project definition. Project objectives should be defined in a quantifiable format so that the proposed software system’s success could be measured against them.

The term ‘quantifiable’ is critical over here. Loosely defined objectives would make your task challenging to validate the success or failure of software project estimation.

Some generic examples to refer to while formulating your project definition are “reduce production time to XX days,” “increase revenue by 20%”, “increase conversion rate to 30%”.

Needless to say, that you should be reasonably aware of current benchmarks before outlining the goals in the project definition.

The cost headers to determine software project estimation in this phase include:

• Time of stakeholders (Project Sponsor) in defining quantifiable goals for project definition.

Requirement Detailing: The Food Plate

Requirement detailing being a significant aspect of the project lifecycle— is essential to ensure this activity is done diligently. As a decision-maker, you want to make sure the requirements are defined in a way that it successfully achieves the goals set in the project definition.

Due efforts are to be spent in validating the requirements and, if possible, verify the degree to which it will be fulfilling the desired objectives. This can be done by various artifacts that could be produced in this stage to capture the software requirements and estimation notes.

Examples here are User Stories, Storyboards & Mockups, Technical Proofs-of-concept to validate the feasibility of specific requirements, etc. The stakeholders also need to carefully capture the non-functional requirements related to performance, scalability, security, etc., which are vital to the success of the project.

Jumping directly into design & implementation without much emphasis

— may lead to an unplanned and iterative development approach, which could make the project expensive.

The cost header in this phase includes time consumed by:

• Stakeholders in defining functional & non-functional requirements of the project.
• The development team in preparing artifacts like User Stories, Storyboards, Mockups, etc.
• Stakeholders (Project Sponsor, End Users) in the validation of User Stories, Storyboards & Mockups, ensuring they’ll serve the purpose.
• Time consumed by developers in implementing Technical PoCs

Design: The Salt

The scope of the design phase of a project is often mistakenly reduced to aesthetical aspects like User Interface (UI) and User Experience (UX). In an actual sense, for a software development project, the design phase has a lot to do with the technical design of the system. Key decision-making related to non-functional project requirements is to be identified and planned for during the designing stage.

Few of these design decisions may also include using third-party/ready-made components, which may further call for implementing Technical PoCs to ensure these components are capable of achieving what is expected from them.

The cost header to determine software cost estimation in this phase includes time consumed by:

• The development team in preparing UI Designs, Technical Architecture Design, etc.
• The development team in implementing Technical PoCs.
• The stakeholders in reviewing the artifacts produced by the development team.

Implementation: The Preparation

The implementation phase should ideally be a mechanical job, provided previous phases are well thought and executed. That said, even in the most basic form, there should be a mechanism in a phase where the project stakeholders should be able to review the progress made and validate whether development is progressing with the right momentum and in the right direction.

Such review workshops could be conducted on a weekly, fortnightly, or monthly basis depending on the size and complexity of the project. Without proper milestone-based or sprint-based progress review in place, you have a high risk of failure.

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The cost headers to determine software project estimation in this phase include:

• Time consumed by the development team in project implementation (coding, quality testing, project management, demos, bug fixing, etc.).
• Time consumed by stakeholders in review and feedback sessions.
• Cost of procurement & licenses related to development tools, development, testing & QA infrastructure, third party components, etc.

Go Live: The Serving

Rolling out a software system is a critical event, and you expect everything to work perfectly in the production environment. To ensure a successful launch of the software, it is essential to ensure that the system is working as expected.

The development team has done its job in coding and testing the software in the development and QA environment. However, now it is the responsibility of the stakeholders to perform a thorough UAT (User Acceptance Testing) of the software before moving to production.

This activity is done by the project sponsor and a few selected end-users of the proposed system (preferably covering all the user-types) to use the system as if in production and validate the behavior against features identified in the ‘Requirement Detailing’ stage and objectives set in the ‘Project Definition’ stage. This phase might also include activities training of end-users and IT support team to handle ‘Level 1’ support.

In parallel, the development team also ensures that the production environment is set with all the required infrastructure & deployment pre-requisites.

The cost headers in this phase include time consumed by:

• Stakeholders in UAT activities.
• Stakeholders in Training activities.
• The development team setting up the production environment, smoke testing the system in a production environment, and deployment process.

Maintenance: The Dessert

Just like any other business asset, a software system also calls for a reasonable amount of ongoing software maintenance.

The maintenance phase includes some of the routine tasks involving production infrastructure health check-up and updates, back-ups, data cleaning & archival, bug fixing & patch releases, minor enhancements, and improvisations, etc. these activities include efforts from stakeholders as well as the software development team.

The cost headers in this phase include time consumed by:

• A development team in setting up automated routine tasks like backups.
• A development team in scheduled maintenance tasks like infrastructure check-ups and updates.
• A development team in bug fixing, patch releases, enhancements, deployments, etc.
• Stakeholders in identifying, submitting bug fixes, enhancements as well as reviewing the completed ones.

ConclusionDecision-makers often fail in accounting for all the aspects related to software project estimation, resulting in underestimation or, worse, compromised development of the project.It is not always possible to account for every tiny bit of cost while budgeting the project. Still, with proper due diligence and by consulting a custom software development company, you can surely minimize the deviations and mitigate risks of project failure quite effectively.Spending years (more than a decade) in this domain and helping world-leading businesses to make the right decisions for their software needs— I would be happy to consult for your business too. Just drop me your details, and I would soon say hi to discuss your needs (the Hunger).