How to Estimate Software Development Project Cost?

Estimating the software development project costs isnot to be missed procedure for every IT project, regardless of how huge it is.

A report conducted several years ago claims that over 66% of the project overwhelm the cost – a third of them go beyond the estimated plan, and about 20% fall short of guaranteed benefits. One of the main software development project estimation goals is to lessen this percentage.

A precise cost estimate is a key to a successful software development project. If you have some exposure to employing development services, you may realize that the Software Development Cost may change under the customizations made or correction added to the documentation. The final budget might develop into something you considered impractical at first.

It’s always difficult to calculate the cost of software development project without clear customer requirements. The cost of software development relies upon numerous variables, for example,

  • • Type of software and its complexity
  • • Development time
  • • Location and the group of the development team
  • • The position of software developers i.e. junior, senior developer
  • • Additional services
  • Reasons Why it is so Hard to Estimate Software Development Cost?

Software development costing is a dynamic process as new advancements, new methodologies, and new approaches come up. All of these incredibly impacts the estimate.

Those who are responsible for estimates hardly consider small nuance, for example, the team member efficiency and experience level, productivity and experience level, vacations, sick leaves, team ramp-up, administrative issues etc. Every one of these focuses may appear to be not excessively significant, but each one of them can result in an inaccurate estimate.

Another point is that requirements change mid-development also. Consequently, you will require extra tasking and estimation, yet doing so be certain that you have reflected them in the initial estimate.

The main problem in estimating accurate software development cost is that the probability of changes in the requirements is very high when individuals begin utilizing the product being in the pre-release state. For this situation, all the preliminary work can be a waste of time.

Additionally, estimates are regularly not updated when the team acknowledges they have already finished the task. It is a genuinely common circumstance when developers speed up their work or work longer and on weekends. On account of speeding up, the team members performance doesn’t increase, and this can diminish the quality and increment the risk of missing necessities.

The most effective method to Approach the Software Development Cost Estimation Process

  • Let’s look at the entire process of project analysis and estimations:

Software Development Cost

– Collect complete requirement from Client which include a high-level idea for the product, the organization’s business objectives, any details of the existing software architecture and framework, wireframes and mockups, user journeys – anything that will enable team to comprehend the necessities and requirements for the project.

– Build team to document the complete requirement with agile method where project manager will drive the complete requirement with team leader and its development team. Regular catch up meeting with team and client to discuss any queries and make sure everyone is on same page. On the off chance of the requirement make a shared file and send it to the client or product owner. At the point when you have the appropriate responses, discuss internally and get signoff from client on final requirement.

– Develop architecture and infrastructure plan including tech stack utilization. Define team breakdown and agile schedule to follow during development phase. All detail should be captured and planned precisely.

– Study the time and effort required for every sprint/element. This area can be tricky as few requirements can be changed / updated during the development phase. Also, few queries also need client confirmation. Schedule a meeting with client and align with all tasks and document the efforts accordingly.

– Due to some external or internal factors the uncertainty in estimation are always possible during the software development. We need to categorize an inaccuracy risk Level score for every such incident with low normal, high and very high where low risk indicates the estimated software development cost are accurate where as high risk implements there is high probability exceed overall software development estimated cost.

– Now team is ready evaluate final time and efforts internally do necessary changes. Get approval from all the stake holders like HR, Finance, Operation, IT and client regarding proposal, estimate, requirements and risks and make final adjustments.

– Keep the progress updated in tools like JIRA on final alignment. Post that team develops user stories and hosts a backlog refinement meeting.

– Finally, we can commence the first development sprint.


  • Steps to Better Software Estimation

  • • Include Business Stakeholders in the Software Estimation Process

Including stakeholders early in the software estimation process assists you to define more precisely what is significant in the software development cycle.

  • • For what reason most Software Estimation Projects Fail?

The appropriate answer is poor requirements and weak leadership. The technology in itself is rarely the reason for project failure. Best technology and developers will fail without great requirements and leadership.

  • • Break the Requirements to Increase Transparency in Software Estimation

Start by separating the necessities far enough so every prerequisite can be built in a short time by a single developer.

  • • Bind the Estimate to Reality

Figure out what you are going to measure against. This is a critical challenge. Discover a bit of the task that everyone agrees and is well-defined and can be assessed to about half of a day in development time.

  • • Set-up the Right Team

There’s entirely more to a team than just a developer. They need a decent supporting cast and great requirements that hold everybody accountable.

  • • Remember Why the Product Owner Matters

This is the absolute most important person for the project. The enabled product owner can focus on the project and make significant decisions.

  • • Great Software Estimation Metrics Should Reveal Problems Sooner

On the off chance that the estimate depends on the developer’s speed, at that point, it is easier to decide if a team is developing at the expected pace.

  • Conclusion

Most likely, you will have to update the estimates for separate tasks or the entire project since you probably won’t have considered some of the nuances at the initial stage of Software Development Cost. This is essentially in light of the fact that you probably won’t have addressed all requirements in full. The additional details you get from the client, the more precisely you can plan the work without rolling out significant changes.

Recent Posts