Why should you multiply developer's estimation by 3? What are the goals and crucial steps of estimation process? And a little bit of theory. See in this presentation.

1. Software Development Project Estimation
Oleksandr Katrusha
Senior Engineering Manager
oleksandr.Katrusha@Innovecs.com
“Prediction is very difficult, especially about the future.”
Niels Bohr, Danish physicist

2. 2
Intro
• Estimated length is 60 minutes
• Feel free to ask questions!
• Terminology
• Software Development (Waterfall, my experience)
• Project
• Estimate – number, document
• Effort
• Estimation – process

3. 3
When?
• RFP response / tender bid
• Make go/no-go decisions with a project
• Cost and ROI (return on Investment)
• Plan new phase
• Plan resources / budget
• Calendar-driven

4. 4
Why?
• Define scope and assumptions
• Know price and/or cost
• Justify the price / budget, not to estimate!
• Sell more, sell better
• Input for other processes
• Sales
• Scheduling
• Hiring
• Budgeting
• Correct estimate is crucial for project success!

5. 5
Structure
• Scope. “What?”
• Riskier than underestimation!
• In / out
• Client sees not what you see
• Assumptions and risks. Conditions
• Versions, separation of duties etc..
• Numbers. “How much?”
• Per task in WBS
• Buffers
• Any number is a commitment!
• Wrapping

6. Experiment - Flower merchant
6
• Have kiosk in Kyiv, ~100 types of flowers
• Ignorant in IT
• 50 to 150 orders per day, private and corporate, wholesale and retail
• Payment in credit card or cash
• Now tracking in Excel - inconvenient, prone to errors and cheating
Need to:
• Track order status (placed, purchased, prepared, delivered, sold)
• Integrate with payment gateway
• In order not to forget delivery and collect payments
• Shelf product does not work, technology does not matter
• How much effort will it take to develop and deploy the
program (in man-hours)?
https://goo.gl/5CCsDs

7. 7
Remember
• Estimation mistakes are very expensive
• The number of (negative) risks is unlimited
• Parkinson's law: ”Work expands so as to fill
the time available for its completion“
• Do not overestimate
• Raise issues and arguments as early as
possible
• Scope creep kills you quick
• And starts from estimate…

8. 8
Prerequisites
• Enough time and other resources
• Know stakeholders and POC
• Read SOW (Statement of Work, contract)
• Deliverables and conditions
• Sales / delivery handover
• Do they know what you develop?
• Do you know what they sell?
• Different KPIs
• Participate in sales process

9. 9
Scope
Unknow
knows
Known
Unknowns
Unknown
Unknowns
Known
knowns
Estimate
Discover
and
estimate
Overestimate
Assume
OR
Put out of scope
Add buffer

10. 10
Define scope
• Collect requirements
• Confirm requirements
• At least by default
• Explicitly state what is out of scope / not estimated
• Or estimate if not sure
• Make it large first (even ridiculous)
• Formal, informal, missing
• Email, talks, references
• Expectations
• Functional
• NFRs
• Legacy artifacts – not only code
• Risky items (not risks)
• “Do it for all forms in the system”
• Captions case

11. 11
Non-functional requirements
• Performance
o Response Time
o Throughput
o …
• Scalability
• Capacity
• Availability
• Reliability
• Recoverability
• Maintainability
• Serviceability
• Security
• Regulatory
(GDPR)
• Manageability
• Environmental
• Data Integrity
• Usability
• Interoperability

12. 12
Create WBS (Work Breakdown structure)
• Types
• Verb – oriented
• Time-phased
• Noun-oriented (features)
• 40 hrs per task max
• 100% of scope
• Non-project activities not included

13. 13
Assumptions
• DoD (Definition of Done)
• Estimation’s “Best before”
• Versions
• Quality bar
• Who does what, support,
subcontractors
• Access to systems (case)
• Hardware requirements &
performance
• Legacy
• Licensing
• Known Unknowns
• Database size (Tb case)
• Integrations
• Legacy code
• …
• Any doubts, comments,
contradictions
• Anything that can be interpreted
wrongly (Tech upgrade case)

14. 14
Units
• Effort vs Duration
• Do you know you team?
• Other projects / tasks
• Man-hours, -days, -weeks
• Billing, time-tracking
• Schedule
• Part-timers, calendars
• Working hours vs effective hours?
• How do you sell it?
• Scheduling /8 /40 /160
• 2 + 2 + 2 = 6 = 8

15. 15
Executors
• Estimate for middle specialist
• Do you know your team?
• Do they have expertise?
• Add to assumptions
• Blends may vary in productivity
by ~50% !
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1.
2.

16. 16
Who should estimate?
• Trained seniors
• With failure experience 
• But must feel safe
• Parkinson's law
• Cognitive biases
• Planning fallacy
• Probability
• Anchoring

17. 17
Estimate!
 Per WBS item
• Development
• BA/SA ~70% of development
• QA ~50%
• Task contingency 5 - 30% of task time
 Outside of WBS
• Meetings ~20%
• Management ~15%
• DevOps ~5%
 Project buffer 5 - 15% of project time
Tips
• Use powers of two: 0.5, 1, 2, 4, 8, 16, (24), 32, (40)
• Estimate all categories if you can
• Optimistic in small, pessimistic in large
% may vary depending on
domain,
technology,
phase etc.

18. Sample
estimate,
man-hours
18

19. 19
What is development?
• Read, understand and discuss task
• Code
• Build / Deploy
• Dev test
• Design and discuss solution
• Research and prototype
• Set up IDE, synch with VCS
• Unit test
• Create test data
• Create test scenario
• Fix bugs after dev test
• Check for rules compliance
• Commit / Review
• Fix after review
• Retest (!)
• Commit
• Fix bugs after QA
• Document
• Log status and time

20. 20
Formulae
• Task effort is a random variable with its distribution!
• Three-point estimation
• a - the best case (Optimistic)
• m - the most likely (Realistic)
• b - the worst case (Pessimistic)
• Best case - average amount if task is performed 100 times
• Most likely case given normal problems and opportunities
• Worst case - everything goes wrong
• Weighted average (Expected time in PERT) E = (a + 4m + b) / 6
• Triangular E = (a + m + b) / 3
• Standard deviation S = (b – a) / 6

21. 21
O – R – P
hrs #
1 0 0
2 0 0
3 1 3
4 3 12
5 8 40
6 5 30
7 3 21
8 2 16
9 0 0
10 2 20
11 0 0
12 1 12
25 154 6.16
https://goo.gl/ZUwwVa
What is the “most likely” estimate?
What is the most probable?

22. 22
Expected value

23. 23
Pros and Cons of 3 points
• Takes time and effort
• Still ambiguous what is “Good, Bad, Real”
• Allows to calculate standard deviation
• Better use for risky tasks with high level of uncertainty
• More or less same results with Realistic + Contingency
• Less time
 Agree on what you all mean by “Realistic”

24. 24
Central limit theorem
When independent random variables are added
their properly normalized sum tends toward a normal distribution
even if the original variables themselves are not normally distributed
20–30 tasks for this to be reasonable, and
each of the estimates unbiased
• Tasks are dependent…
• Drucker's Law: "If one thing goes
wrong, everything else will, and
at the same time”
• 6 sigma
 Add (hide) project buffer!

25. 25
Tips
• Be pessimistic first
• “What could go wrong” exercise?
• Use templates, checklists, samples, historical data
• Agree about buffers
• Beware of reverse engineering estimate
• You have no DoD
• Complexity is infinite

26. 26
Checklist – requirements and management
Check if you have not forgotten:
• Planning, time tracking and budget control
• Reporting
• Clarifying and updating requirements and design
• Translation to/from English
• Onboarding and education
• Any system-wide features
• Demo data and environments, demo meetings
• Delivery preparation
• Design update after changes to code
• The actual time spent of estimation (case)

27. 27
Checklist - development
• Post-delivery support and warranty
• Check SOW
• Quality bar
• Code quality
• Unit tests
• Certification
• Environment maintenance and outage
• Receiving access
• Bugs in standard and 3rd-party products
• Backlog from previous phases / projects

28. 28
Checklist - development
• Data management and upgrade
• Security development
• Code review, refactoring and retest
• Performance test and tuning
• Integration with parallel teams or third parties
• Interim upgrades
• Risks of new technologies and frameworks

29. 29
Checklist - test
• Test documentation
• Performance test
• Integration test
• Regression test
• SP / hotfix test
• Test / Demo data setup
• …

30. 30
Wrapping
• Options
• Visible scope and assumptions
• Show / hide details
• Buffers / bug fixing… - client specific
 Elite
 Business
 Economy

31. 31
Recap
Define Scope
Define Assumptions and Risks
Create WBS
Estimate Development per task
Define Contingency per task
Add BA, Test per task
Add Management, Meeting, DevOps, …
Add Project buffer
Check
Pack and sell

32. 32
questions