IT Project Cost Estimation — an Overview Of How to Do It Right

The accuracy of project cost estimation

We use a 3-point scale.
  1. The first one is an assessment of the specifications you deliver to us. We use a 3-point scale. 3 is for top project specifications that make us fully understand your problems, needs, and expectations, while 1 is for specifications that lack details.
  2. Another one is prediction of how precise and accurate is the project estimation. Here we also use a scale from 1 to 3 and the outcome is based on what you provided and how complex is the project. Then we operate based on our experience, so we take previous similar projects with their cost and time data to estimate your project.

Cost estimation — what to expect from your potential technology partner

  • Manual or automated unit testing. You need to agree with a software house what % of total project time should be allocated to QA.
  • Project management. Is it included in your project? Note that it usually takes 10–15% of the budget.
  • Team meetings. They are important to keep everyone involved in the project on the same page. It takes time to set all the details, so meetings can take up to 10%.
  • And what about setting up new environments, making project analyses, deployment, etc.? They come with extra money for the project too.
  • Nonfunctional requirements for the project. If there are such requirements, they need to be agreed before we start the valuation. Do we need to run a load test to find problems before they impact users? Perhaps you want your application to automatically scale depending on its needs. Load balancing traffic requires adding more servers, so then we need to use relevant solutions that also cost money. The same goes for third-party requirements, etc.

Be aware of underestimation

Source: https://dilbert.com/strip/2018-01-22

Project cost estimation is easier said than done

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