Effort Estimation Techniques: A Guide for Software Developers and Team Leaders

Crunch is a menacing reality in software programming — one that we’ve all encountered more times than we can count.

It takes a huge toll on the physical and emotional state of our team members. At its worst, it may even halt the development process or result in an unfinished and bug-ridden end product.

As a team lead, your role means more than meeting deadlines and crossing deliverables off a checklist. It involves making sure that your team is functioning at the optimum level and that everyone has a proper handle on their workload.

Effort estimation empowers team leaders like you to make better decisions by predicting the time and resources required to complete a software project. It helps you satisfy your team members, meet deadlines in a timely manner, and offer accurate price estimates to your clients at the onset of every project.

But, 57% of organizations fail to complete projects within the assigned budget. Clearly, there’s a pattern of bad project planning here and it all leads back to the issue of poor effort estimation.

So how can you optimize your project estimation techniques for maximum accuracy? It’s all about using a proven framework with reliable data at its core. Here, we share our best effort estimation techniques honed by years of development experience to help you better manage your development teams.

The Iron Triangle

There are three main elements that make up any kind of project — resources, deliverables, and timeline. These elements are the foundation of all project management. They are called the iron triangle because you can’t really change one of them without impacting the other two.

In traditional waterfall development, the scope of the development project remains fixed from beginning to end, while resources and time must be allocated to meet the scope. But, agile projects are different.

In agile, the resources and timeline of a project remain fixed while it’s the scope of the project that must be adjusted. When all’s said and done, agile development helps software products get to market faster without compromising on development quality. So how does that work?

Instead of trying to complete a project in a single go, the agile methodology is a process of collaboration and feedback that breaks the entire thing down into several iterations. Client and stakeholder feedback is collected at every stage of the software project and the most important features get released first, followed by the rest.

As you may have guessed, agile estimation is very different from the estimation methods used in traditional projects. Instead of tackling the whole project in a single sitting, you decompose it into smaller tasks and release your software over multiple versions. This is the basic principle of project management in the SaaS era, where products and services are constantly updated to meet the changing demand.

Up next, let’s walk through the exact steps involved in performing effort estimation for a software project using the agile methodology:

Step 1: Scope the Project

Before you get into the nitty-gritty of project planning, you need a consistent method for scoping and ranking projects by complexity. That’s why we use the Cynefin Framework.

Dave Snowden’s Cynefin Framework was originally developed for IBM — it’s just as relevant to software development as it is to business management. Basically, you look at your project from a top-down perspective and categorize it based on the amount of effort required as either “obvious”, “complicated”, “complex”, or “chaotic”. How you categorize the project will determine how you respond to it.

It’s a simple exercise — but it creates a consistent framework for creating project scopes before planning on how to tackle them. Start by creating an outline of the deliverables for the next iteration of your software project and the resources you have available. Then, categorize the project according to the framework we just mentioned.

Step 2: Break Down Tasks

The next step is to break your project down into smaller chunks making it easier to manage. The agile framework offers a great way to do just that.

First, every project is broken down into multiple iterations. The iterations are made of various smaller tasks called user stories or story points — with each story describing a new functionality or feature from the product user’s perspective.

The idea is to estimate the time and effort required to complete each user story so you can gain an idea of what it takes to complete the entire iteration.

7pace is a time-tracking extension for Azure DevOps and Github. It lets you easily track and estimate the time and effort needed to finish a project without leaving your preferred development environment. Start tracking your work at the push of a button and use the dashboard to uncover new insights and data into your team’s work patterns.

Step 3: Track Your Hours

However, your estimates have to be made up of more than just random guesswork! That’s why you need data.

Effort is usually measured in person-hours — which is just the amount of effort required to complete an hour of work by the average worker at your organization.

Start by tracking the amount of time it takes you to complete a single task, then aggregate the total number of hours it takes to complete a project from start to finish. 7pace lets you track your entire team’s effort on a granular level across different stories and iterations. You can find out exactly how much effort went into fixing a bug or designing a new feature.

Step 4: Estimate With Data

Once you have collected enough data, you can use it to inform future decisions about similar projects by estimating the effort it’d take in advance. The way you do this is by calculating your “pace”, which is the amount of time you estimated for a project or task divided by the actual time it took to complete it.

With 7pace, you gain access to a pandora’s box worth of insight to improve your effort estimates over time. You can a single dashboard to track your progress across the entire project life cycle and check your pace on the fly.

It’s important to collect historical data on your team’s effort so that you can make your estimates more accurate over time. Regularly compare your effort estimations with the actual amount of tracked hours per project to see if they’re getting better.

Step 5: Review With Peers

Before you create your final estimate and use that to inform your client proposal, there’s one final step you must take. Time-tracking data can empower you to draw project estimates with uncanny precision, but there’s still room for human error.

That’s why you need to review your estimates with peers for their expert judgment and run them by the developers who’ll be carrying each task to the finish line. Ask them how long they think it’d take and check your backlog of historical data to find out how accurate their predictions were during past projects.

As you begin to set your deadlines and make cost estimations, remember to have some room for error. Internal friction and time-wasters can negatively impact your development effort, so be sure that you account for these invisible factors.

Drastically Improve Your Effort Estimation Skills With 7pace

Effort is relative both to the individual and the team. Different developers have entirely different approaches to problem-solving, which is why the hours they track can also vary significantly.

Effort estimation is a matter of finding the right baseline for your team and organization, so that you can make better predictions about project deadlines and development costs. But without the right dataset, it may as well be nothing but guesswork.

7pace is a time-tracking tool that empowers you with real data to improve your effort estimation skills over time. That means tracking your hours across all current projects, iterations, and stories to help you establish a proper baseline for your team’s performance output. With all this data in your hands, you’ll not only be able to make better predictions developing software, but you’ll also gain insight into new ways to improve your team’s productivity.

Our integrated solution is currently the only professional time management tool for developers using Azure DevOps — also coming soon to Github. Through our downloadable clients and powerful API, you can get your time management data wherever you need it, whether that’s your phone, tablet, or desktop.

Want to take 7pace for a spin? Get started today with a free trial!