One of the frequent reasons for failures is inaccurate estimates. Estimation is the knowledgeable assessment of an unpredictable event.(DeMarco, 1982)Define "An estimate is the most optimistic prediction that has a non-zero probability of coming true." (Standish, CHAOS Manifesto, 2013) The report shows that cost overrun increased from 56% in 2004 to 59% in 2012, and it also shows that in 74% of the challenged projects, 59% experienced cost overrun. Accurate estimates are useful for project planning and implementation that lead to project success. Few of the causes for poor estimates are:
  • Frequent requests for change by User - User lack of understanding what they, which leads to frequent changes in the project and result in cost overrun.
  • Overlooked tasks - During the estimation stage overlooking few features of the project as part of the software development.
  • Poor problem definition - Lack of proper understanding of the problem and being optimistic about the project.​
  • Insufficient analysis of developing estimate - Rather than comparison to similar, past projects based on documented fact guessing can lead to inadequate analysis.
(Lederer, Volume 35 Issue 2, Feb. 1992) Studied cost estimating practices reported by 115 managers and professionals. Shows that one out of every four projects completed is reasonably close to its cost estimate. He provided nine guidelines for better cost estimation: Few of the guidelines are:
1) Assign the initial estimating task to the final developers: Lederer suggested two ways of assigning the responsibility for estimates one is the separate-function approach in which assign the task to a group of experienced estimators. The developers who work on the project can later re-access the cost based on changes after the project approval. The other one is the combined-function approach in which the analysts and programmers prepare the estimates and then start the analysis, design, programming, testing and implementation. The study shows that using the combined function approach decreases the estimating problem than using the separate-function approach because analysts and programmers are accountable for cost overrun they are more committed to timely project completion.
2) Don't rely on cost estimating software for an accurate estimate- Study shows that only 17%of the managers used software packages for cost estimation. Users of the software package for estimates reported 63% cost overrun while nonusers reported overrun of 62%. Thus software packages are not associated with cost overruns, they are also not associated with the satisfaction of managers.