Case

A Software Cost Estimation Challenge

Software Cost Estimation

A software development company faced significant challenges in accurately estimating the cost and effort for various projects. Many software projects, particularly larger ones, were suffering from budget overruns due to inaccurate initial estimates.

These difficulties often lead to unrealistic estimates and, in turn, cost overruns.

To tackle this, Optima Estimate explored various software cost estimation methods, including algorithmic techniques developed over 20 years of research. We also considered several factors to choose the best estimation approach, including the project size, the nature of the project’s goals, and the development style.

Approach to Estimation

The software cost estimation techniques were applied to projects like Just Weather, Stock Exchange, Unit Converter, and Call Manager apps.

The company used different estimation techniques based on the project’s size:

For small projects (up to 5 people), the most effective methods were bottom-up estimations from the team members
For large projects (25+ people), a combination of top-down approaches during the initial stages and bottom-up approaches.
Medium projects (5-25 people) could leverage a mix of both techniques for optimal accuracy.

Each of these projects required different estimation techniques based on their scope, complexity, and development style, helping the company ensure that the resources and budget allocated matched the actual needs of the project.