How to estimate software project cost & schedule?

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Many elements go into project planning and estimation. It includes how much it will cost to complete the project. Also, how long it will take to complete the project and what the schedule will look like.

While there’s no exact way to guarantee accuracy in these figures, you can use proven best practices to get reasonably close estimates. This is, of course, provided you include all the necessary information in your plans.

Let’s discuss some of those practices below.

The main reasons behind project failure

Several reasons can contribute to the failure of a software project. The most common ones include unrealistic expectations. However, inadequate planning, lack of communication, and poor resource management are just as likely to hamper the flow of your project development.

These can all result in a lack of clarity, leading to scope creep and unrealistic deadlines. If you want your project to succeed, you must be aware of these potential pitfalls and take steps to avoid them.

To do this, there must be regular and open communication between developers, project managers, and stakeholders. You also need to set realistic goals for what your team should accomplish each day with clear deliverables on how long it will take to complete those tasks.

Finally, plan for contingencies by identifying what needs to happen if things go wrong or as expected to prepare you for any scenario.

Estimate your time and costs with these five steps

1. Know what you’re building. You can’t estimate time and cost without clearly understanding the project requirements. So, before calculating how much custom software development costsensure you have a detailed list of features and functionality.

2. Know your team. Who will be working on the project? What are their skills and experience? The more information you have about your team, the more the chances that your estimate will be more accurate.

3. Know your tools. What software and hardware will you need to complete the project? Ensure you include everything in your estimate, from development tools to office space rental.

4. Know your risks. What could go wrong during the project? Knowing potential problems before they happen is key to estimating time and costs. Ask yourself:

  • What are the potential pitfalls?
  • How much does it typically cost for each potential problem?
  • How many days might we lose if this happens?

5. Calculate all tasks needed for completion and determine when you’ll need them completed. Knowing how long tasks will take means you’ll know when resources (people or equipment) need to be allocated for a project, so make sure to include design & development cycles or marketing analysis into your calculation. Your timeline should also outline every task necessary for success with a due date and an owner responsible for completion.

Step 1 – Understanding customer requirements

The first step in estimation is to understand customer requirements. It includes understanding their features, how they want the software to work, and their budget. Once you have a good understanding of their needs, you can start estimating the cost and schedule for the project. If it’s your first time doing this, use an open-source tool like Microsoft Project or Asana to create a timeline and assign resources accordingly.

A quick way to calculate hours for developers is by using the following formula:

Hours = (feature * days) / developer average hours per day. If there are two developers on your team, you divide by two instead of 1.

Step 2 – Estimating time.

Initially, it would be best if you devised a ballpark estimate for how long the project will take.

This can be tricky, and there are a few different ways to approach it. First, you can start by looking at similar projects and seeing how long they took.

Alternatively, you can divide the project into smaller tasks and estimate how long each will take. Whichever method you choose, make sure to build in some extra time for unforeseen delays. These delays might be caused by anything from missing features to bugs that need fixing.

What if I don’t know how long something will take?

If unsure how long something will take, give it an educated guess based on what you know about the work so far.

If this is the only unknown task on your list, add 20% more time to your estimate of the entire project’s duration.

Step 3 – Creating a detailed timeline.

A detailed timeline is essential for understanding the cost and schedule of your software project. It helps you allocate resources, set deadlines, and track progress. Here’s how to create a detailed timeline for your software project:

1. Start by creating a high-level overview of the project.

2. Break down the project into smaller tasks.

3. Estimate the time it will take to complete each task.

4. Add the estimated time for all tasks to get the total project time.

5. Use a tool like Microsoft Project or Gantt Chart to create a visual timeline.

6. Include buffer time in your timeline to account for unexpected delays.

Step 4: Calculate the budget.

After your project is underway, tracking progress, identifying issues early, and managing risks is critical.

Doing so will help keep your project on track and avoid costly delays. Here are some tips for tracking progress, identifying issues, and managing risks on your software development project:

1. Establish a baseline. Before you can track progress, you need to establish a baseline for your project. This baseline should include the project’s objectives, deliverables, milestones, and budget.

2. Set up a system for tracking progress. Once a baseline is established, you need to set up a plan for monitoring progress against that baseline. The type of reporting required may vary depending on whether the project has been completed.

Reports may only be needed periodically (eg, quarterly) to measure performance against targets if it has been completed. However, if ongoing, information should be generated more frequently (eg, weekly).

It’s also essential to provide feedback about how any deviations from plans were handled or mitigated—and what steps have been taken to prevent recurrence in future projects of a similar type or scale.

3. Keep an eye out for red flags and green lights!

Conclusion

No matter what method you use to estimate your project, there are key things to remember:

  1. Make sure you have a clear understanding of the scope of work.
  2. Be realistic about the time and resources it will take to complete the project.
  3. Don’t forget to factor in contingencies for the unexpected.

By following these simple tips, you can ensure that your estimates are accurate and that your project stays on track and within budget.

Article by Claire Mark

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