How to Estimate a Software Project? A Detailed Guide from Designveloper

To start every project with an outsourcing company, the very first action businesses need to take is to provide initial ideas and key requirements. This helps a development company conduct an estimation for your future products. But do you really know how to estimate a software project, what steps should be done, and how important this document is? Let’s dig into this topic with Designveloper to have a better insight into the estimation process.

Definition of Project Estimation

Project estimation refers to the activity of predicting core factors that can affect the software development process. These factors include the project’s scope, human effort (person-month or person-hour), timeline & milestones, and budget. Those who are in charge of this work (like business analysts) often use all the very first requirements or input information from clients to estimate these factors for the future projects. 

What Is “Rough Estimation”?

A rough estimation is the very first level of every estimating process. It happens when the client sends out their requirements. However, most of the time, these requirements are vague and unclear. This is where the software development company comes to “decode” these ambiguous requirements. Accordingly, the company will use these inputs (ideas, timeframe, budget, etc.) to size and estimate the software project.

As stated above, due to the lack of information, companies can only deliver approximate estimations. The accurate level would be from 25% to 75%. And obviously, the estimation will not include detailed insights and obstacles.

On the one hand, the reason for doing this is to help clients understand the scope, length, and range of work. On the other hand, clients will base on this estimation to decide if this company’s vision matches their requirements (budget, duration, and other resources).

The Importance of Estimation When Developing a Product

Do you know that one of the most common causes that makes many projects fail is inaccurate estimations? A classic example you may already know is IBM – Queensland deal. In 2007, IBM pitched a crazy bid of $6 million to develop an application to administer payroll for Queensland’s health department. Shortly after that, the company faced a lot of hidden business obstacles and technical challenges. In the end, the application could not work properly, and the cost for this project was 200 times higher than the estimation.

This case study has shown you how crucial an estimating activity is to software development companies and their clients. In other words, a business needs estimations to plan and prepare its resources, such as humans, tim,e and money. Thus, when planning estimations, we are able to find risks, opportunities, and hidden obstacles that may happen during the process. The more detailed and insightful your estimations are, the greater the chances that your budget and time plan fit the reality.

Further, you may find it useful that estimations will help your team and your soon-to-be outsourcing partner reach agreements and commitments about requirements, proposed functions, etc. more easily. On the other hand, you and your team are able to check whether the partner has enough knowledge and experience in software development. In other words, good partners often come up with more detailed and comprehensive estimations because they have done numerous projects to master this. Designveloper is one of those experienced companies like that. Right now, you can try to estimate your software project with Designveloper here.

FURTHER READING:

1. An Overview of Project Management Services

2. 3 Types of Management Products You Should Know

3. 18 Software Project Management Methodologies for Software Development

Project Estimation Techniques

There are various approaches to estimating your project. Below are several common methods.

1. Expert judgment

As the name states, Expert Judgement refers to opinions that experts give in a context of decision-making. In other words, it is a process of one person or a group of people who have knowledge of the domain making predictions based on their experience or a particular set of criteria. Expert Judgment performs its benefit across industries such as finance, marketing, and especially the technology industry.

Upsides

It only takes us a short while to produce estimations. Moreover, this method requires few resources (time and money, etc.) and can be precise like any other expensive method.

Downsides

There are many benefits resulting from using Expert Judgment to estimate a project. However, lots of disadvantages come along with this one too. Sometimes, experts don’t have clear evidence-based reasons to support their opinions as well as estimations. Nevertheless, their judgments may be affected by bias (personal experience, time pressure, etc.). That’s why Expert Judgment is also a risky method to use.

Analogous Estimation – a variant of expert judgment

This technique uses historical data from a similar job in the past to estimate analogous parameters for a future project. Some of the parameters used in this method are scope, cost, and duration. 

People at Designveloper often use this estimation technique for new projects. Normally, we’ll closely work with a client to analyze his/her requirements and turn these requirements into a list of features. At Designveloper, we’ve built a library of features and functionalities based on historical data from our past work. Using this library, we’ll search for similar features that align with client requirements and estimate the resources needed for each feature. Then, we’ll create a preliminary estimation plan for humans, a timeline, and a budget for the project.

2. COCOMO

Constructive Cost Model or CoCoMo is a software estimation model developed by Barry W. Boehm. This is a procedural model used to predict the size, cost, effort, time, and quality of a project. There are three types of CoCoMo models: Basic CoCoMo Model, Intermediate CoCoMo Model, and Detailed CoCoMo Model. You can decide to choose one of these three based on the requirement of your project: how accurate and detailed the estimation must be.

Basic CoCoMo model

People come up with estimations through this model only based on project size (lines of code). Therefore, the basic model is the riskiest method to estimate a project.

Intermediate CoCoMo model

When it comes to this model, estimators will collect data like cost drivers and the size of the project. And of course, the intermediate model will produce more accurate estimations for your project.

Detailed CoCoMo model

Although the intermediate model of CoCoMo can resolve numerous issues compared to the basic one, there are still several limitations along if effort is estimated inaccurately, and the need for cumbersome calculations when working on big projects. That’s where the detailed model will help you with. Detailed CoCoMo will apply various effort multipliers to each cost driver attribute. Meanwhile, the project is divided into smaller modules. After that, we will estimate the effort used to complete each module and sum it up.

Cost drivers

These factors often impact the human effort, time, and cost needed to implement a software development project. Project managers can quantify these factors to estimate more precisely. Normally, cost drivers used in intermediate and detailed models include:

• Required Software Reliability
• Database Size
• Product Complexity
• Execution Time Constraint
• Main Storage Constraint
• Virtual Machine Volatility
• Computer Turnaround Time
• Applications Experience
• Programmer Capability
• Virtual Machine Experience
• Programming Language Experience
• Modern Programming Practices
• Use of Software Tools
• Required Development Schedule.

3. Work breakdown structure (Combination-based estimation)

According to Wikipedia, “A work-breakdown structure in project management and systems engineering is a deliverable-oriented breakdown of a project into smaller components.” The component units in this method are deliverable, task, and subtask. This tool helps you estimate the detailed costs and time needed for a software project. Furthermore, the work breakdown structure also gives you an outline for schedule development and control.

Why WBS?

When a team starts discussing the estimation, all stakeholders will review and calculate it and come to agreement and commitments altogether. Thus, all team members will understand and be more responsible for the project. Furthermore, your cost and budget estimations are more accurate when using the work breakdown structure method.

There are also some other methods to estimate your project:

• Application of Parkinson’s Law
• Estimation by complexity level of order
• Estimation by the team
• Pricing to win

4. Some project estimation tips from Designveloper

Your business must provide all the essential information and requirements to the outsourcing company so that they will have a better picture of your plan. However, before sharing anything, you should make the outsourcing company sign a non-disclosure agreement. This way, your idea won’t be stolen by others.

• There should be a meeting between the two parties to discuss and define goals as well as commitments beforehand.
• Estimators have to understand the functional and non-functional requirements.
• Goal/requirement prioritization is important.
• All assumptions must be cleared.

FURTHER READING:

1. 10 Project Management Skills to Succeed at Work

2. The Importance of Scrum to a software product

3. 10 Best Practices in Software Project Management in 2022

How to Estimate a Software Project

Despite your estimation technique, you should complete the following three steps to start your estimating process smoothly: 

Step 1: Establish project estimation scopes and purposes

To run as an estimating process seamlessly, not only must there be a baseline to measure all future possibilities, but also every misunderstanding and contradiction should be cleared off. And how can you and your outsourcing partner achieve these? The answer is that all participants need to understand the scope and purposes of each estimation.

Step 2: Establish technical baselines, ground rules, and assumptions

It is essential to identify the functionality of project estimation. Nevertheless, if the requirement is too vague to define, you have to use your team’s ground rules and estimators’ assumptions to decide what elements are and are not included in the estimation. Furthermore, your team needs to establish assumptions frequently to match the development of the process.

Step 3: Collect data

Estimations always include a lot of uncertainty; that is why this activity happens to ensure a consistent estimation. Furthermore, these pieces of information will allow estimators to develop their own viable initial estimations.

Do You Like a Great Estimating Service? Do You Want It? Just Buy It!

Just like any other service, it’s hard to find an expert or a team of experts when it comes to project estimation. Sometimes, a free estimating service would hit you right in the eye. Well, sounds interesting, huh? But you must already know that most of the time, “free” equals inaccurate and money-wasting.

Great things take time and effort, and so does the estimation. If you and your team don’t have a good knowledge of technology, then here are some issues that may come across the process, such as:

1. Hidden works

Though these issues come along with almost every project, an estimator who lacks experience sometimes cannot point them out or can only discover some of them.

2. Risky features

These requests seem easy, but actually, it’s hard to compete with the current budget and timebox.

3. Red flags

Red flags could be some unethical, impractical requirements or requests that users cannot understand and use. Features that go out of technology trends or do not fit in a particular culture of an area may result in such issues too. And that’s why an expert is highly recommended in this case, and we all know that experts do not work for free.

Conclusion

In short, estimating is one of the most important things to prepare for your future software project. Doing this right, chances are that your product will be on top, or else, it goes down to hell as a disaster. And if you are looking for an expert to size and estimate your plan, Designveloper is the perfect choice for you. Fill in this form to share your ideas, and we will contact you as soon as we conduct the estimation. Cheers to future success!