How to Estimate a Software Project Better: Working Methods and Common Pitfalls

25 May 2018
11 min
author avatar
Alexander D.

Cost estimation in project management is a valuable, or to be exact, a must-have stage. Well, you may skip it on your own risk, but only if you have unlimited finance or time. However, in the real business world, timing, ROI and revenue are able to either advance your business, keep it at the same level or destroy it.

We fully understand that clear software development time estimation is crucial for your stakeholders. Since they need at least approximate release date of the future app. But more importantly, that they constantly judge the successfulness of your project and whether it has been delivered on time and on budget. Therefore, this may affect your business relationships with them and, as a result, the future of your business.

Concerning software development, that is known as one of the hardest to predict, it's twice as important to clarify all project aspects in great detail. Often the task may seem easy at first sight, but it requires much more technical expertise later. Precise planning starts with a strict understanding of the purpose of your app, the users' wants and the skills of developers.

So, which software estimation techniques do we use? Let's explore them together.

How to Estimate Your Project with the Maximum Efficiency

Why to conduct software development estimation in man-hours?

The answer is simple. It helps to be aware both of your project's time and money expenses in one shot. To calculate the time for a full software development lifecycle, we first evaluate dependencies of all tasks. Then as soon as you know the price of man-hour from particular IT company, the finance consumption can be easily obtained by multiplication.

So what does man-hour truly means? For a better understanding let's examine this term more deeply. A man-hour is a workload performed by IT specialist with an average experience during one hour of uninterrupted work. The term includes 2 elements:

  • Man. The effectiveness greatly varies depending on the specialist. Each one has different expertise. For instance, it'll require much more time to do the task by junior than a senior developer. To produce a precise software development estimation, each team engaged in the development should be differentiated and each team member in particular.
  • Hour. It's important to note that it's an hour of uninterrupted work. If the task was done in 3 days, but the actual work time was 2 hours, then it's still 2 hours. And in order to eliminate downtimes, we recommend optimizing work schedule during planning.

Want to reduce costs on software development? Learn more about test-driven approach that makes it possible

Thus, each of these components is essential to get accurate time estimation. For successful planning, we manage dependencies and anticipation for resources needed. So that none of specialists were sitting idle, waiting for their colleagues to complete the related task.

Why Agile approach is better for software project estimation?

Conventional project management demands the workload and functionality to be fixed and both time and cost to be variables. The cons of traditional project management:

  • It's inevitable that you may need to make changes to your project's scope during development lifecycle but it's fixed.
  • Variable cost leads to an inability to control return on investment (ROI) that means unpredictable risks. It also results in changing requirements, since you'll need to add more team members or keep them longer.
  • Variable time results in losing control over your product's competitive advantages. It is possible, because your competitors may release their product earlier or you may skip an important industry date.
Estimation techniques in project management: Agile vs Traditional approach

Agile lets you change project scope easily and not worry about the variability of time and cost

That's the reason why we use Agile software project estimation methods in Cleveroad. They effectively solve all the issues above. By using them you receive fixed team members and time for your project, and can easily change the scope.

Key features of Agile project estimation

That is why Agile approach is so popular

  • Small work sprints with fixed prices. The project divides into sub-releases that represent a completed ready-to-use part of the product. Each has a proper price. As soon as a sprint is finished, the following sprints are re-evaluated on the basis of what we've learned from the previous one. It helps to reduce unplanned costs and gives you a possibility to add new or revised features directly during a project's lifecycle.
  • Adaptive changes. The main feature of Agile software project estimation. It means that since the beginning of the project we are ready for any changes required to make a product successful. Just give us a feedback on time and a relevant data. If the change has the same price, no additional cost applies. If it's lower, then extra work can be identified or removed.
  • Easy termination. If a solid part of your project has been delivered and it doesn't bring additional ROI, you might want to suspend the project. It's commonly permitted but requires strong, trusting relationships between project team and customer.

Do you want to know more about project delivery process at Cleveroad? You can find it here: Successful Project Delivery and How To Control It

  • Easy to add extra features. Users' needs and market situation are constantly changing. You may need to add extra components or even port your app to an extra mobile or PC platform. For a fixed price project that would be impossible. For Agile, it'll just require adding extra work sprints.

Software project estimation techniques

There are workable software project estimation techniques that help to evaluate future projects the most effective way. Let's explore some of them:

Planning (or Scrum) poker

A powerful technique that is brought by Agile project management. It starts with dividing the project into separate features. Then the team of developers holds a meeting where each developer responds how much time he/she considers spending on a proper feature. And the most controversial estimations are discussed within the team.

Comparison to the previous projects

If your current project is similar to the ones we've already completed, then it's easier for programmers team to produce an accurate time estimate. During this method, we certainly keep in mind the complexity of new app and multiply it by planned man-hours.

Top-down & bottom-up

When using a top-down software development estimation technique, your project is decomposed into particular features and estimated apart from others. After that, the result summarizes and you have time estimation for the full project. Bottom-up is used to do the opposite: estimating the project as a whole. If the difference between those two methods is significant, our project managers find a reason and reach a balance.

Cost estimation techniques in software engineering that do not work

Our continuous practice of estimating software projects hasn't passed in vain. Having faced various projects and customers, we'd like to share the most frequent misconceptions of software development estimation:

Common pitfalls in software development estimation

Mistakes you should definitely avoid, if you want to conduct software project estimation successfully

1) Considering time and human resources as interchangeable

When a deadline is close or some important industry date is coming by, the speed becomes crucial. Then it's easy to suggest that to quicken development you can just add more developers to it. Did you think this way too? But the truth is, time and people are convertible only when there are no complex factors including dependent tasks, communication, learning curves.

Each new programmer that you add to a team will have to establish coordination with others concerning training and acquaintance with project details. What's usually forgotten is that an increasing number of team members in any case add extra interaction within the team. This results in consuming more and more effort to manage the group.

Another point to consider while carrying out an evaluation in software development is task dependencies. Pregnancy couldn't be just called a "9 man-month" project. Because you can't speed it up by adding more people. Hence, the well-designed project plan should always keep in mind dependent tasks. This usually requires preventing developers from being switched between different tasks. At Cleveroad we generally stick to the working scheme: one project - one team. It helps to dedicate specialists to a single project and therefore increase their effectiveness.

2) Inaccuracy due to commercial pressure

It's imminent that business goals leave a solid trace on project estimates. On one hand, sales department generally tend to maximize revenue and thus shorten man-hours. On the other, project managers, that care about secure product delivery, try to extend it. The truth is somewhere in the middle ground.

A decent amount of estimates in IT industry are affected by commercial pressure. Decreasing estimates without decreasing scope is best to avoid. Since it's a short-run change that can bring big problems in the distant future.

In our experience, commercial pressure on software development cost estimation should be kept to a minimum. Only in this case, a customer will receive the most accurate estimate. It will fully accommodate the whole amount of work, development speed and possible delays. Don't just strive to cut cost on your project if long-term viability of your app is at stake !

3) Ignoring possible risks

Most projects include a significant amount of coding tasks that are linked together. It's imminent that some of them could require more time than expected at first. That's why we always put in possible risks and the resulting estimate has a min-max range.

4) Ignoring the testing

One of the most common myths is that after initial development cycle the app is ready to use and testing is an additional and not obligatory step. In fact, it's nearly half of work done when a programmer first writes it.


You can learn more about testing and why it's important if you read this article: All You Need to Know about Testing and Quality Assurance

Testing stage is frequently neglected during the software project cost estimation or added late when the development is nearly completed. Nothing can be further from the truth. Testing is an essential phase of your app development. It's the one and only way to launch your app in conditions that differ from those that were made by the programmer. The more you test, the more you improve your user experience. Translated into figures, you should aim to spend at least 25% of the time on testing within the overall development process.

Software project estimation process at Cleveroad

We have tested a dozen or more estimation techniques and have made a lot of the above-mentioned mistakes. So the simple but reliable method that we use at Cleveroad usually consists of 2 steps:

Software project estimation process at Cleveroad

We share our best software project estimation techniques

1. Rough estimate.

During first communication, you provide us with app requirements. That's when we divide the whole task into features and specify time consumption for each of them. Having realized the overall picture, we generate an approximate estimate. It's accuracy is often between 75 to 25% because the details and pitfalls of the project are commonly unseen on this stage.

2. Detailed estimate.

It begins after all the agreements during rough estimation are negotiated. And it's one of the most accurate estimation methods with up to 100% accuracy. Such a result can be accomplished by obligatory engagement of highly skilled developers during estimation. Detailed estimates are made according to the thorough documentation of the future application: wireframes, specifications, etc. In case you have a prepared documentation, you can receive a detailed estimate from our managers within 2 business days. In another case, we'll prepare all the documentation ourselves but it requires up to 2 weeks.

Summing up

As you might have noticed, estimation is a complex but essential part of your development project. It's required in order to successfully release it on time and on budget. There are a lot of pitfalls and experience requirements to perform it accurately so that all the stakeholders were satisfied. Nevertheless, the leading IT vendors implement all the modern project estimation techniques to produce it for a client in the most precise way.

If you want your estimation to be conducted at a professional level, you may suggest outsourcing your app development to one of the experienced IT teams. The benefit of this approach is they often have an extensive experience on hundreds of software projects. Therefore, they are familiar with numerous technologies and able to estimate at the pro level. In-house specialists often don't have such a wide experience that makes their estimations more problematic and imprecise.

So if you are looking for a reliable partner -- contact our managers to learn the details and get your free custom estimation. Also, do not forget to subscribe to our newsletter in order not to miss the latest articles and videos from our team.

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