3 Stages of IT Project Estimation

Published: August 12, 2014 4 min. read
Svitla Team
By Svitla Team
Managed Operations
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According to Standish Group research, 31.1% of projects will be canceled before they ever get completed. Further results indicate 52.7% of projects will cost 189% of their original estimates.

To complete the project on time and budget that were initially estimated, a thorough analysis should be made before the project starts. Let’s consider what stages are usually passed during the estimation.

Stage 1 – Gathering of Information

In the first stage, we need to analyze all materials received from the customer. In some cases, the customer provides detailed specifications, in other cases, only brief requirements for the project.

It should go without saying that the more information we have at the beginning the more accurate estimation of the project we get. This can be better displayed with such popular notion as the “Cone of Uncertainty” (described in the book “Software Cost Estimation with Cocomo II”) which shows that the estimations become more accurate as far as the project comes to its end (pic.1).

Stage 1 – Gathering of Information

Picture 1 – Cone of Uncertainty

As the starting point, we create a Mind diagram that allows us to see the interconnections of all available project data and identify possible “bottlenecks” (pic.2).  Analysis of such diagram results in forming a pool of clarifying questions to the customer. 

Picture 2 – MindMap Diagram

Stage 2 – Creating Helping Diagrams

In case we receive the specification from the customer or get answers to our questions on the project requirements, or have a more detailed description of the project's stages, we can then build a more accurate Mind diagram (pic.3) with all interconnections that will help us create a Gantt diagram of the project.

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The Gantt diagram shows not only project tasks and their relations but also the time supposed to complete them. To build a Gantt diagram we usually use estimation on the analogy, because the mathematical models in the case of project estimation are as a rule irrelevant or impossible. For convenience, we make a decomposition of each task, obtain interim estimations, take account of risks, and hence have a more precise Mind diagram. However, this technique has a limitation – it is badly applicable to new industries.

The interconnections on the Mind diagram set the time priorities of tasks. The same interconnections are then transferred to the Gant diagram (pic.3). If some task was shifted in time, this may influence the timing of the rest of the tasks or will make their execution impossible.

Stage 2 – Creating Helping Diagrams

Picture 3 – Gantt Diagram

Thus, using Mind and Gant diagrams as helping tools we are able to estimate time for project development and identify the bottlenecks. Of course, the project time can be reduced, in some cases, by different ways:

  • Using more team members in the project. However, according to the research conducted by Tom DeMarco in his book The Deadline, team augmentation does not always lead to good results. The research states that there is a critical number of members when each additional team member will only make worse to the project process. 
  • Paralleling of tasks. In case when the co-dependence of different tasks is weak, it is possible to work on them simultaneously in separate teams (for example, work on web site and native iOS application).

Stage 3 – Final Estimation

To get the final estimation it is necessary to create a table where all terms of project tasks, testing time, budget, and risks should be taken into account.

Conclusion

To sum up all the above-mentioned information, we can say that project estimation makes the basic stage of any IT project. Any overestimation or underestimation negatively affects the project, budget, and other indexes and relationships with the potential customer. Working on an IT project estimation, we try to take into consideration multiple factors in task creation. For this purpose, we widely use mind diagrams that help to understand requirements and find bottlenecks.

Written by
Svitla Team
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FAQ

What is project estimation?

Project estimation is the early organized workout of predicting how long, how much, what size, and what risks are involved in a project before it kicks off. It collects and reviews all possible client requirement details, plus related artifacts like mind maps and Gantt charts, to see links between tasks and holes in the plan, then breaks work down into smaller parts for better effort and risk checking. Since estimates made at this point are extremely vague (“Cone of Uncertainty”), they get updated as more details come in. Good estimation keeps projects on time and within budget, preventing the harm that both overrating and underrating cause to delivery, costs, and client relationships.

How do you estimate a software project?

Project estimation is a continuous process that starts with collecting and analyzing all the information and requirements received from the client. This exercise usually involves building some mind maps for visual representation of project data, interdependencies, and possible bottlenecks – therefore comprising clarifying questions to the customer. In response to requests for more specific details or answers, more elaborate schemes are created, defining tasks, their relations, and time assumptions – often based on analogy-based estimates. At this stage, task decomposition is carried out, along with consideration of risks and other factors such as team size and task parallelization, to arrive at a final overall estimate that covers testing time, budget, and identified risks.

How to estimate a project correctly?

Collect available requirements and context from the client. Analyze them. Use mind maps to visually clarify the scope, dependencies, and bottlenecks of the project. Break it down into tasks — break the work further with more detailed diagrams, such as Gantt charts. Apply analogy-based estimates from similar projects if possible to use a hybrid approach that includes time for testing and risk, plus realistic team capacity (do not assume that adding people will make work go faster). Consolidate all this into an estimate that clearly shows the timelines and budget, assumptions, and risks involved. Be ready to update it when new information becomes available.

What is the best method of estimation?

Begin by gathering and analyzing all requirements and contexts received from the client, then use any visual aids such as mind maps or drawings to clearly define the scope, dependencies, and bottlenecks. Divide work into small tasks and then define this structure further with the help of more detailed diagrams, such as Gantt charts. Use analogy-based estimates from similar projects if possible. Include testing time and risk, adjust for real team capacity – do not fall into the trap of believing that adding more people will make things go faster! Consolidate everything into a structured estimate reflecting timelines and budgets with explicit assumptions and risks included – ready to be redone as soon as better information becomes available.

What are the four steps of estimating?

Collect and analyze all available requirements and project information from the client. Understand the scope and context. Organize this information. Use mind maps to see dependencies, clarify open questions, and find possible bottlenecks. Break down the work into smaller tasks. Build a schedule (for example, using a Gantt chart). Estimate each task’s effort by analogy with similar past work and include risks and possible parallelization. Put these inputs together in a final estimation table that includes task durations, testing time, budget, and identified risks. Update it as more information becomes known.