Software Estimate Facts – 8 Dumb Facts Will Make You Smart!

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Software estimate facts? What is so special about them?

80% of executives I speak to are still missing the point. So, here is a blog post, uncovering software estimate facts!

The software estimate is an approximate measure of work needed to complete the given scope. For example, it can take up to 10 hours to design a logo. So, the estimate is 10 hours.

We determine the estimated cost by multiplying the estimate with the resource’s hourly rate. For example, 10 X $40 = $400 is the estimated cost for designing the logo.

software project estimate

Software estimate facts:

Note each of the following facts and reflect on them. Understand these points in detail to steer your project successfully:

  1. The primary purpose for the estimates is two-fold:
    • Setting expectations with the customer on how long the project/task may take and the estimated cost
    • Plan the work with the resources required to deliver outcome as per the scope
  2. The estimation is guesswork by nature. So, the actual effort to complete the given scope can be different from the estimate.
  3. The estimate’s accuracy depends on factors like the estimator’s experience, the complexity of the task, clarity of the problem/solution, clarity of functional/non-functional requirements, and acceptance criteria.
  4. The estimate works as an anchor. It sets expectations on how much time and cost is associated with the given task or project. You should understand this point very clearly. Find more on this point here.
  5. High level estimates are misleading. Ensure that the estimates are provided to you at the right level of detail. The estimates should not be too high level. In addition, check that there is enough allowance for supporting activities. These are your tasks that are your responsibility—for example, Data Migration, Testing, Training, and Change Management.
  6. It requires effort and cost to provide estimates. The more effort we spend, the more accurate estimates we may get. But, after a certain point, we get diminishing returns on our investment.
  7. You can solve a problem in many different ways. So, the effort estimate depends on the proposed solution and assumptions.
  8. The estimates are based on many undocumented assumptions. If the assumptions do not hold, then the estimates may no longer be valid. As a customer, when you receive estimates, always check if the assumptions are reasonable. Ensure that the proposed solution approach will meet the business needs and resolve a given problem(s).
  9. What you don’t know, you don’t know. So, as a customer, always have a contingency budget to deal with the unknowns during the project.

It is essential to understand the purpose of estimates. For example, the total project estimates do not equate to the total cost. To avoid any surprises, revisit the software estimate facts above, take time to reflect on them. It may help to prevent bitter surprises during the next Software implementation project.

Good luck!

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