What are the different software estimation techniques is a thought-provoking question.  Every development team encounters its fair share of challenges when striving to meet delivery deadlines – it’s part and parcel of the job. This, in turn, can lead to considerable delays in software projects, leaving project owners scratching their heads in frustration.

So, you might be wondering, what’s the secret sauce to avoid these hiccups? Well, it often comes down to employing different software estimation techniques, all while maintaining clear communication and foreseeing potential roadblocks.

Software Estimation is Hard. But we should still do it anyway. 

It is widely acknowledged that estimating software projects is very hard. 

HBR’s study uncovered that 16% of IT projects experienced cost overruns exceeding 200% and were nearly 70% delayed. McKinsey’s research also revealed that IT projects tend to exceed their budgets by an average of 45% and their schedules by 7%. The situation was worse with large software projects: projects over $15M exceeded budget by 66% and had schedule overruns averaging 33%.

I’m sure many of us in the software field have experienced this firsthand. At some point, you might have confidently said, ‘Oh yes, that should only take a couple of days,’ then, a month later, you found yourself still not finished. 

It’s regrettably common for people to observe this pattern, recognize the difficulty of estimating software project timelines, and simply decide to… quit.

Advocates of this perspective propose an alternative approach. They recommend asking, ‘What can we accomplish in the next two weeks?’ rather than ‘How long will it take to complete Feature X?

But eventually, someone will inquire, ‘When will Feature X be ready for release?’ In certain scenarios, providing a precise answer is necessary.

Estimation plays a pivotal role as it allows us to gauge and plan for the project’s capital requirements, ensuring we have the necessary resources and funding to move forward effectively.

Major Constituents of Project Estimation 

Estimating a software project involves several key components, primarily the feature list and UI screens. Typically, these components are provided by someone who isn’t a developer.

With these initial inputs, the technical team allocates time and develops designs for the UI screens while outlining the feature set for each screen. Once this initial detailing is completed, the team evaluates the required skill sets and discusses the timeline.

To provide accurate time estimates for each feature set, the team must have extensive experience in similar projects. This experience is essential for precise estimation.

For a comprehensive and precise understanding of your upcoming project and its associated costs, the estimation should encompass the following components:

1. Tasks: Detailed descriptions of the required activities.
2. Resources: The human workforce required, including the number of experts.
3. Rate: The cost-time ratio.
4. Duration: The expected length of production, measured in hours or days.
5. Third-party services: Considerations for any additional services that may not directly involve the software vendor.

Now, let’s look at some of the different software estimation techniques. 

List of Different Software Effort Estimation Techniques

Bottom-Up Software Effort Estimation Technique

In this method, you break down the work into smaller, less complex tasks. For instance, it might involve something like.

   Complexity                                                                                                 Time

———————————————————————————————————-

Small                                                                                                               1 day

Medium                                                                                                          3 days

Large                                                                                                               5 days

Extra Large                                                                                                    10 days

Each task is individually estimated and then aggregated from the lowest to the highest level to derive a final estimate. While this ‘bottom-up’ approach may be more time-consuming, it offers the highest level of accuracy when all component details are thoroughly considered.

Analogous Software Effort Estimation Technique

This one is often used out of the different software estimation techniques. 

In this method, you assess the cost of a project similar to the one at hand and note any differences. You may also compare various aspects of the current project with other projects to gain insights into cost prediction. 

If parts of the project don’t have a comparable reference, a bottom-up approach is used to estimate those sections accurately.

The resulting project estimate can be reasonably precise when identifying a suitable analogy. However, it’s crucial to remember that no two projects are identical.

Three Point Software Effort Estimation Technique

In this methodology, you approach project cost estimation from three distinct angles: the ‘best scenario,’ the ‘worst scenario,’ and the ‘most likely scenario.’ Subsequently, you calculate the average of these three scenarios.

This three-point estimate method offers the advantage of minimizing the risk of an overly optimistic estimate. 

It is also considered a straightforward yet precise technique for estimating software development costs and project timelines. To enhance accuracy, different individuals can provide estimates for the three scenarios.

What If Software Effort Estimation Technique

What-if analysis involves the exploration of various scenarios to evaluate how changes or variations may affect the project’s scope and estimate, with a particular focus on the timeline, effort, resources, and costs. This analysis is valuable during the project’s inception and throughout its management.

Project managers can proactively address potential alterations, risks, and uncertainties by analyzing what-ifs. 

This process allows for examining different hypothetical scenarios and their potential impact, enabling more informed decision-making, enhanced planning precision, and an increased likelihood of project success.

Evidence-Based Software Effort Estimation Technique

Evidence-based scheduling takes a fundamentally different software estimation technique.  

Instead of beginning with estimates, you initiate the process without any initial estimates. 

You dive into the work, tracking tasks or stories, their sizes, and their actual durations as you progress. 

Gradually, you accumulate data from past stories, allowing you to apply observed times to your remaining backlog, and this naturally yields an estimate.

When successfully implemented, evidence-based scheduling is an excellent approach for small projects. It eliminates the need for upfront estimating and delivers highly accurate results. However, it can be challenging to implement, as it necessitates a stable team, relatively consistent work, and projects with sufficient longevity to generate the required data for projections. 

This technique may not be as practical when teams are more ad hoc or projects exhibit significant variability or brevity.

With this approach, you can never understand how much capital would be needed in this project. This can work well with small projects. 

Pitfalls in Estimation

By now, we have explored different software estimation techniques.

Let’s take a closer look at some common pitfalls in software project estimation:

1. Insufficient project requirements
2. Overly optimistic estimates
3. Time constraints and pressure
4. Limited historical data
5. Neglecting risk evaluation
6. Ignoring interdependencies
7. Scope expansion without control
8. Lack of stakeholder engagement
9. Limited experience and expertise

The Best Alternative

Having considered all the different software estimation techniques mentioned above, it is worth asking at this stage: 

“Which software estimation technique is the most efficient?”

At Venture7, we leverage two fundamental software estimation techniques: bottom-up and Three-point Estimation techniques. These methods are among the most realistic and effective software project estimates. Let’s delve into how each of these techniques works. Feel free to contact us for a project estimation, which you can use as a benchmark for comparison.