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Ten-Step Project Estimation Process


Many project managers and project management offices have unrealistic expectations about estimates. The definition of the verb estimate is to produce a statement of the approximate value of some quantity. Estimates are based upon incomplete, imperfect knowledge and assumptions about the future. For these reasons, many estimates of software costs tend to be too low due to omissions of important product functions and project activities. Most importantly, however, all estimates have uncertainty. There is no such thing as a precise, single-value estimate. Managers should always ask how large the uncertainty of an estimate is! A manager can use the size of this uncertainty in conjunction with other factors such as perceived risks, funding constraints, and business objectives to make decisions about a project.

How can projects address the uncertainty of poor estimates? How can the risks associated with initial estimates be identified, managed, and controlled? The answer is straightforward: by defining, establishing, planning, and applying a consistent, repeatable, and effective estimation process.

software estimation process that is integrated with the software development process can help projects establish realistic and credible plans to implement the project requirements and satisfy commitments. It also can support other management activities by providing accurate and timely planning information. Realistic plans will also describe how the resources that are required to undertake the initiative in accordance with the schedule will be secured. The planning process, as critical as it is, is difficult and takes time to perform correctly. Managers often truncate the planning process by using “easily available” information that is often inadequate; by employing whoever has the time, even if those individuals are not qualified to perform the estimate; and by using only one estimation method to save time.

Successful software engineering requires the application of engineering principles guided by informed management. The principles must them-selves be rooted in sound theory. While it is tempting to search for miracles and panaceas, it is unlikely that they will appear. The best course of action is to stick to age-old engineering principles. There simply are no silver bullets.

Cost estimates are projections of required effort, time, and staffing levels. Because all estimates, particularly those made at the beginning of a project, are based on assumptions, they should be considered probabilistic. Cost estimates in particular should provide a range with an indication of accuracy, i.e., least, probable, and most, with the least and most values representing the upper and lower bounds of the projected cost.


Ideally an estimate should be produced using the ten-step process.

During October we will cover each step on this blog.


  1. Establish estimate scope
  2. Establish technical baseline, ground rules & assumptions
  3. Collect data
  4. Size software
  5. Prepare baseline estimates
  6. Quantify risks & risk analysis
  7. Review, verify, validate estimate
  8. Generate a project plan
  9. Document estimate & lessons learned
  10. Track project throughout development
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