Any project manager from the industry would agree that, more often than not, it is inherently challenging to estimate a software development project accurately. Project estimation is a complex equation that brings together the scope of work, the costs, and the time it takes to create a product. This practice helps stakeholders to understand if their idea is feasible and if they have the funds to start developing their project right away. 

In order to deliver a plausible estimate, you need to thoroughly analyze all the steps and tasks involved in a process. That’s quite a job, to say the least. What’s more, correct assessment is also a key to building good customer relationships, and that makes this task even more difficult.

In this article, we’re going to find out what techniques work best for accurate project estimation. Plus, as a bonus, you’ll get a free-of-charge project estimate template that you can use in your projects. Let’s get started.

Involve team members 

It’s not unusual that PMs may inadvertently exclude other team members from the project management estimation process. This is where one of the main problems lies: this kind of exclusion increases manifold the complexity of a project’s evaluation. Therefore, it’s advisable to include each member of your team in the assessment process to get an accurate project estimation. This estimation method is the called expert judgment technique.

Moreover, you should always take an active part in project development. This practice will help you in seeing the big picture when estimating a future project. Forbes claims that 54% of IT project disasters are attributed to poorly executed project management. Thus, be in the driver’s seat and delve deeper into the work of each team member. 

Such statistics are scary but understandable. According to research by McKinsey, employees spend about as much as 20% of their work time per week gathering and searching for the information they need. In addition, ineffective communication and collaboration are two main causes of stress in the workplace. Make sure that doesn’t happen on your project.

With such a proactive attitude, it gets easier to identify the three main factors that affect project evaluation: the number of participants, the scope of work, and the budget. You will also gain insight into the skills, experience, and contribution level of other team members. This information will greatly help you in coming up with a reliable project estimate.

Check out your team's records

If you have the opportunity to review documentation related to completed projects, go for it. You may find the data that will be helpful in your current project. Surely, each project is one of a kind. However, the clients, team members, and technologies that you encounter are often similar. This method is called analogous estimation.

Figuring out how much time your team has spent completing tasks on previous projects will provide you with more opportunities to achieve comparable results. Keep in mind: this method is quick but not that accurate, though. And one more thing… Before comparing, make sure this very project was successful :)

Work structure

We’re all familiar with Work Breakdown Structure (WBS). It helps to break the project down into separate phases, tasks/subtasks, and achievable project milestones. With that technique called planning (or Scrum) poker, you can automatically generate an accurate estimate of the project. Let’s dissect these terms first: 

• Tasks are individual operations that you perform to achieve your goals.
• Subtasks that take no longer than a couple of days allow you to break a task into smaller stages.
• Milestones are major milestones or events in the course of a project that help break down the project. Milestones can be used as milestones throughout the project.
  

From all of the above, it can be concluded that understanding the timing, scope, cost, resources, and risks can be critical to properly estimating a project. Also, you need to be aware of trends and the latest changes in the industry. This way, the perfect combination of skills, knowledge, and experience will help you evaluate projects much better.

When planning timeframes, add buffer times so that you have room for maneuver. For example, if a client takes extra time to approve, or if a team member suddenly gets sick. The report by McKinsey reveals that 66% of software development projects fall prey to cost overruns, and almost 30% of them take longer to complete.

In an ideal world, some tasks could be done in a day. In reality, it might be worth planning two days for them. Surely, it is not necessary to have a buffer time for each of your tasks. Weigh the risks and only add them extra days only if you feel it makes sense.

Manage risks

Let’s talk about risks in detail. In fact, risks can arise at all stages of a project. Therefore, managing them is one of the most important points in planning. An experienced manager can not only assess and anticipate such situations but create a plan with ways to solve them. The team, in turn, must also know how to react to any change.

What are the risks?

• Optimistic expectations about time and costs;
• Poorly marked requirements and wishes;
• Poorly defined roles and responsibilities;
• Changes in requirements;
• New requirements;
• Budget cuts;
• Bad communication.

5 preparation steps we adhere to at Akveo

Here at Akveo, we suggest those five dimensions that are critical for accurate estimation:

1. Prior to the project’s start, structure its scope and elaborate on its estimation with your team members.
2. Think about the functional scope and hours required for initial development. 
3. Determine parameters for such project steps as stabilization, project management on an independent tab. Calculate it as the percentage of efforts for the initial development phase from step two.
4. Set hourly rates and the number of employees required for each role.
5. Submit one-time activities and their estimation to totals.
   

Finally, don't ignore both the automated and manual testing that follows the initial development cycle. You're only halfway through when the development team says the application is written.

The estimation worksheet 

With the goal of taking project estimation to a whole new level, we developed a project cost estimation template to evaluate projects of any complexity.

The template includes into the quote not only functional development but all support activities on the project: stabilization, management, quality assurance, design, etc. The scope may be prioritized and split into several phases, and the template will calculate them separately.

Once you have estimated a quote, it's easy to adapt it to future changes in efforts price, activities duration, and planned risks. This way, when doing project planning, you get the essential data at a glance whenever you need it.

To Sum Up 

It won’t be an exaggeration to say that project assessment requires some unique experience and skills. There is a recurring joke in the community that claims that "the only time you're certain how long it takes to complete a project is when it's done."

Poor project estimates can ruin any good idea, whereas proper estimates may bring such ideas to perfection. Is it possible to eliminate guesswork when estimating? Not entirely. However, with tools like project cost estimation templates, the job gets easier. Follow this advice and maximize your chances of estimating a software development project like a pro.

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P.S. Project estimation is about proper communication and trust. Therefore, it's vital to choose the right software development agency to handle your project. Do you have a project idea in mind? Contact us to get the right estimation.