Software Project Estimation

Once we met as a group, we started creating a list of tasks related to the project. I encouraged the team to list every task related to the software project that took any time, effort, or money. Setting up new environments, purchasing equipment, doing installations, etc. all take time and need to be taken into account.

I encouraged team members to review our list of tasks and bring any past information about how long similar tasks had taken to complete in the past. In our case, we used days of effort as our measure. When it came to generating raw estimate numbers, the team might be unanimous or vary to a great degree. If there were large variations, I took the average and noted it as a "high risk" or, if the variation was smaller, a "medium-risk" estimate. New tasks that didn't have any historical data behind them they would also be high or medium risks. If it was an estimate based on historical information, then it would be a low-risk estimate. The end result was a list of tasks with raw estimates with an uncertainty factor.

There are several tools that generate estimates using uncertainty factor and Monte Carlo simulations of possible outcomes. I used one called Galton [4] (named for the famous mathematician) developed by my colleague David McFadzean. We set our uncertainty factors as 1.1 (low-risk estimate), 1.5 (medium risk) and 2 (high). The tool uses a statistical algorithm to apply those factors to our estimate numbers. For example, a medium-risk factor of 1.5 means that the simulation calculates a variance so that 80 percent of the randomly generated tasks' durations fall between the estimate divided by 1.5 and multiplied by 1.5. The number of iterations in a Monte Carlo simulation helps to counter the large effect this would have if you just multiplied your raw estimates by these numbers and left it at that.

Figure 1: Estimates in days with corresponding uncertainty factors

The output of the tool was a graph with an S-curve shape showing a range of dates with associated probabilities assigned:

Figure 2: Graph with a range of possible outcomes

We used a spreadsheet to add in multiple people in a project over a date range:

Figure 3: Graph with a range of possible outcomes

Instead of communicating one date to management as "the date," we targeted a range of dates with a probability of success around 90 percent. (Refer to Figure 3) The probability for success by looking only at the raw estimates (in Galton, they are called "nominal estimates") was very low. In Figure 2 above, it didn't even show up on the graph. The next step was translating this into effort by adding in how many people we had available on the project. We explained the process, what we used as uncertainty factors, and how many simulations we ran. We wanted to make sure everyone knew how the process worked.