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Role of Estimation In Software Engineering


Project Cost Estimation Techniques and Priciples

The estimation is a wonderful landmark. Especially when it comes to successful digital transformation. Each company chooses its path based on the goals and assessment of its capabilities. The same goes for a vendor who receives a request for software development. Accurate estimation is the beginning of a productive partnership. Today we propose to talk about IT project cost, time, and resources estimations in detail. What do you think?


Software Development Estimation Techniques


The essence of project estimation is the necessity to predict how much money, time, resources, and effort will spend to create the required product. One or more vendor team members perform it to provide to a customer. The document plays a principal role in decision-making.

Ievgen Chupryna, Software Architect at JEVERA


Estimation is an art, requiring a balance. A supplier should try hard not to overestimate or underestimate its work. The estimation is correct when your team believes in it, and a client chooses your company among the dozens of competitors after familiarizing with it. It's so arduous to achieve such results, but we try to.

Ievgen Chupryna, Software Architect at JEVERA



Making an assessment, a specialist should determine the minimum and maximum value of the following 6 metrics:

  1. Scope. The amount of work to be done within a certain period.

  2. Time. Duration of development.

  3. Cost. Basic and additional payments incurred by the client.

  4. Quality and technical characteristics of a solution produced for a certain time and cost.

  5. Resources. Here you should answer the questions: "How many specialists does a project require? In what measure will they be involved?"

  6. Risk. A parameter is required to determine the reasonability of product development in terms of price = efficiency.

One or several specialists can estimate a project from a few days to a few months, depending on its complexity and a client's request features. Often a PM, an architect, or both work on it. Other team members can also join if it's needed. The more right people are involved in the estimating process, the more accurate the result will be.

Estimation Metrics

Innumerable custom product development supports the existence of different software estimation techniques, like Expert Opinion, Bottom-Up Analysis, Function Point Analysis (FPA, FP), Analogous Estimating, Work Breakdown Structure (WBS) building, etc.


We want to tell you more about the last three methods, as they are the most common.


Function Point Estimation


The technique determines project cost, timing, and other metrics' dependence on the product's functionality. The estimation here is conducted in three stages:


Stage #1. Experts define app function points, analyzing types and numbers of required functions.


Stage #2. IT-team classifies FP into 5 groups: external inputs, external outputs, external inquiries, internal files, external interfaces.


Stage #3. Mathematical calculations determine the value of the project estimation metrics.

Function Point Estimation Stages

Analogous Estimating


What is a project estimation by analogy? Imagine that you have made ten almost identical software products. If a company receives a request to design the eleventh similar solution, a team hasn't to perform point-by-point analysis to draw up an estimation document. It is enough to review previous projects' documentation and determine how much time, resources, funds, and other things will be required for new development.


Anatoliy Medvedchuk, Software Architect at JEVERA


This approach saves time a lot. And it is definitely a plus. But the analogous estimating suitable for simple standard tasks, like building integrations. It is hard to find two similar complicated solutions. I bet that each of them will have its peculiarities that significantly affect the estimation. Therefore, this technique is not recommended for non-standard projects. Of course, unless you have 100% relevant experience.

Anatoliy Medvedchuk, Software Architect at JEVERA



Work Breakdown Structure


WBS is considered one of the best and most versatile techniques. It helps to divide a project into phases, tasks, and subtasks, etc. Then it's possible to estimate each unit separately and calculate the average amount for each metric.


JEVERA's team uses this technique because of several reasons:

  1. it can be applied to a project of any size or complexity;

  2. a client can evaluate not only an estimation file but a complete strategy with distributed roles, a sequence of actions, etc.;

  3. this technique allows a company to optimize the PM work because the specialist can then use the extended estimation as a development plan.

How To Estimate Software Cost Accurately


Tip #1. Never make a software development estimation superficially. Especially if the cooperation agreement is signed on fixed price conditions. A hasty opinion is likely to make a client question your decency or underestimate the cost of your efforts.


Tip # 2. Study the client's requirements impeccably. If a customer has no clear idea of ​​what it wants to get, study its current condition and help draw up the bigger picture.


Tip #3. Choose the most optimal project estimation technique based on the client's requirements, future product peculiarities, and your own experience.


Tip #4. Invest in visualization. The best confirmation of the evaluation accuracy is the product architecture. So, among other things, work on building the architecture.


Tip #5. Use robust computing tools. It is imperative not to be mistaken in the calculations.

Tips for Accurate Software Estimation