Accurately estimating software projects is challenging. This guide outlines key principles and tips for better estimation, focusing on pre-project evaluation.
Basics of Software Estimation
Estimating software projects should be an objective assessment of required effort and time. Estimates help planning but should be seen as something other than fixed commitments. Often, selecting the lowest estimate leads to poor decisions and budget waste. To avoid this, be realistic about estimates or reconsider the project if the estimates are not feasible.
Common Estimation Issues
- Historical Insights:
- Lederer and Prasad’s Guidelines: Projects often exceed estimates. Key tips include detailed scope definition, using historical data, and involving all stakeholders.
- CHAOS Report: Reports show a significant failure rate in software projects, with Agile performing better than Waterfall. Engaging users and executives is crucial for success.
- High-Profile Failures:
- FBI Sentinel: Underestimated complexity and evolving requirements led to major delays and cost overruns.
- UK NHS IT Program: Over-ambitious scope and integration issues caused massive cost overruns and project failure.
What Makes an Estimate Effective?
Getting a reasonable estimate despite frequent inaccuracies is essential. A good estimate should be honest, accurate, and detailed enough for decision-making. It should also align with executive expectations to prevent misunderstandings. Accurate estimates are crucial for starting projects confidently and defining key features. While initial estimates should be flexible due to changing requirements, even broad estimates can be helpful to if detailed and reliable. How can executives ensure an estimate meets these criteria?
Achieving Accurate Estimates for Better Business Decisions
Businesses can’t predict the future but need accurate forecasts for intelligent decisions. Reliable estimators focus on accuracy and suggest adjusting the scope to meet budgets rather than cutting down on required hours.
Sharpening Estimation Accuracy
Steve McConnell’s book highlights a test for software estimation skills. Participants provide a range of values with 90% confidence. Most people score low, showing a common overestimation of confidence.
McConnell advises using systematic methods for accuracy, not guesswork. Calculate effort as Effort = Number of Requirements × Average Effort Per Requirement for simple tasks.
For tasks with more variability, use the PERT formula: PERT = (Optimistic Effort + 4 × Most Likely Effort + Pessimistic Effort) / 6
These methods are based on data, leading to better planning.
Achieving Accuracy in Software Estimation
Software estimation often involves a range, not a single number. The PERT formula requires historical data, adding complexity. The Cone of Uncertainty shows how estimate accuracy improves over time but can still be uncertain.
Estimates improve with good project management and expertise. If estimates are too broad, the Cone suggests a range of 0.67 to 1.5 times the initial estimate. The estimate may be unreliable if the upper bound is much higher than the lower bound.
Adopting Agile: Flexibility in Project Management
Agile development uses user stories to define requirements, which can change. User stories should be:
- Independent: Can be reordered without issues.
- Valuable: Needed.
- Estimable: Effort can be estimated.
- Small: Manageable in one iteration.
- Testable: This can be verified through user actions.
These principles support flexibility and adapting to changes in requirements.
Avoiding Common Estimation Mistakes
Common mistakes that lead to underestimating software projects include:
- Loss of Focus: Ensure all user stories match the project’s goals. Create a clear goal statement before estimating.
- Ignoring User Diversity: Include all user types, not just the main ones. For example, add features such as “Admin can fulfil orders” and “Executive can view multiple orders” alongside “Buyer can pay for the order.”
- Overlooking Non-Functional Requirements: Consider aspects like security and performance, which often involve trade-offs. Address these before estimating.
- Neglecting Transition Needs: Plan for data migration and staff training, which are often underestimated.
Addressing these issues early can improve estimates and reduce future problems.
Enhancing Business Estimation Practices
Estimates are tools for decision-making, not commitments or bids. They should guide, not compete. Many projects fail due to scope changes, optimism, or unexpected issues. Reliable estimates should be honest, precise, and based on solid calculations, with the upper bound at least twice the lower bound.
In Agile projects, user stories can replace detailed requirements. Combining good estimation practices with a lean approach improves efficiency.
Both methods focus on clear scope and data use. Practical estimation and lean eCommerce brand rely on stakeholder engagement and feedback to align with needs and reduce risks. This leads to better resource management and project outcomes.