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How to Make Accurate Budget Predictions for Agile Software Tasks


In most cases, the time required to complete a software development job ends up being double the original estimate. After software is delivered, more than 60% of its functions are never or rarely used by the client. Almost three-quarters of software initiatives end up significantly over budget. Before starting development on a piece of software, it is common practice to create an estimate of how long the project will take. The process begins with the collection of both functional and nonfunctional criteria. A quotation detailing the anticipated time and money investment is then forwarded to the customer. In the end, he decides to put pen to paper. This tried and true method of estimating software development tasks is frequently unsatisfactory.

The customer’s tendency to add new demands midway through a project makes it more difficult to finish on schedule and remain true to the terms of the original agreement. If the client sees a prototype at any point in the development process, he is more likely to make suggestions, make adjustments, or even eliminate features altogether. Maintaining a rigid adherence to the requirements agreed upon and mentioned as such in the contract leads to issues, especially if new ongoing insight or changing market conditions are taken into account. Implementing a change management process is one strategy for dealing with uncertainty. On the other hand, adopting an agile approach to project management can result in a more adaptable and gratifying method of delivering software. There is a constant stream of new features being requested and other functionality may be dropped, raising the issue of how to accurately estimate project costs and delivery dates. How to accurately price an agile project and keep up with shifting requirements. How can we maintain financial stability while maintaining flexibility in our project delivery?

As a result of agility, fewer projects will fail.

The Agile Coalition was established in 2001, and the Agile Manifesto was released that same year. The principles outlined in this manifesto emphasize the value of people over processes and tools, the importance of delivering working software over writing detailed documentation, the value of customer collaboration over contract negotiation, and the importance of being flexible over sticking to a rigid schedule. Feature Driven Development (FDD), Extreme Programming (XP), and SCRUM are all examples of rapid software development methodologies used today (XP). All of these agile techniques share the belief that it is difficult to predict or control every aspect of a software development project at the outset. The plan is to lock down project time and budget while keeping feature delivery open. It’s not uncommon for novel concepts to emerge after the project has already begun and some preliminary results have been presented. In addition, the market is in a state of continuous flux throughout the duration of the project, necessitating frequent revisions to the original blueprint. The best software solution for a client’s requirements is not always the result of a fixed scope established at the outset of a project. Not every problem can be solved by adopting a more structured approach to change management.

Iterations, which are also known as timeboxes or sprints, are a popular agile practice. These cycles should occur at regular intervals of two weeks to four weeks. In addition, it is common practice in agile development to reorder requirements both at the end of each iteration and initially during the requirements process. The features that have yet to be developed are compiled into a “feature backlog,” and are prioritized by customer worth to determine which ones will be worked on in the next iteration. Functionality or fully developed and tested features are given at the conclusion of each iteration. In an agile development process, the client or product owner is brought in early on, given early access to working code, and encouraged to offer feedback and suggestions for how to better existing features or request brand new ones. Each iteration includes new functionality that was either not worked on in the previous iteration or was not completely developed and tested in the previous timebox. Delivering functional features and software at the end of each timebox is prioritized over checking off a list of tasks in the project plan. After all, just because work is done doesn’t imply that software is ready to be used.

The benefits of adopting such nimble methods are extensive. While the team prioritizes the most important features in the queue, new perspectives and ideas are more openly accepted. Completed features at the end of each iteration show the customer the project’s progress. With increased agility, it’s easier to avoid wasting time and resources on features that were initially prioritized but are no longer necessary. If clients are so freely allowed to add new features while the project is running, however, the issue of how to keep costs under control remains open. How can we keep development expenses down without sacrificing quality or the timeliness of our releases?

Agile software development job estimation

Estimating the relative size of all known features or user-stories in the backlog using story-points is a practical and efficient method for managing agile software development projects. User-stories are use-cases in a condensed form, written in a plain-text style that even non-technical project participants can understand. They use phrases like “As a [role] I do [action] in order to [results]” to explain the feature that needs to be developed. Each feature or user narrative is given a story-point value that represents its size or development effort. If you think it will take twice as long and require twice as much work to implement one feature as another, then you should award the first feature with twice as many narrative points. You shouldn’t associate work hours with user tales just yet. Stick to a simple list of potential values, such as 1, 2, 3, 5, or 8 story points, when assigning story points to user stories. Start with a smaller user narrative or an average-sized user story and

expand from there. Determine the relative size and complexity of each user tale and assign story points accordingly. Assuming that, in the first two-week iteration, a number of user-stories are transformed into usable software functions, which features were prioritized by the customer and highlighted at the top of the feature backlog? Three user-stories were fully created and tested after two weeks. The prior estimation for these three user stories was 5 story points. As a consequence, the development team’s current progress, productivity-rate, or velocity can be easily determined. In this project, the team is able to complete 15 story elements per iteration, or their velocity.

Budgetary constraints can be managed with the help of Velocity.

By estimating all of the features that are known to be implemented in the project, allocating story-points to all of the features, and then correlating these estimated values to the number of story-points the team can develop on average during the course of one iteration, the estimated delivery time and speed of development of the team can be calculated. The sum of the story-points created so far and those still to be developed provides insight into the project’s trajectory and estimated completion date as new features are added to the feature backlog and perhaps others are removed from the same list. The velocity is automatically fine-tuned at the conclusion of each consecutive iteration as more features are developed and tested into working software. Keep in mind that the features you get at the conclusion of the project are not guaranteed. As the project progresses, however, it’s likely that the software being developed will be of practical use to the client. This is especially true if the client was involved in the project from the start and if completely tested features were delivered early on. The bulk of the software is expected to have been delivered on schedule. Perhaps some of the planned features were overlooked or will be introduced in a future update.

Estimates can be made for agile initiatives. If the current rate of development remains roughly constant and there is a known set of estimated features in the backlog, the velocity provides obvious insight into when the running project can actually be delivered. If the project’s pace indicates that it will not be completed on time, adjustments can be made, such as hiring more staff or eliminating some features. The productivity-rate of comparable past development projects provides the project manager with useful data for estimating new projects, and can even provide customers with a reliable glimpse into the amount of functionality that can be produced in a given time frame.

Sjoerd Jan ter Welle has worked as a project manager for software development for a long time. He founded the Dutch Project and Process Improvement Consortium and has been running an offshore software development company in Romania for over a decade. He has written extensively on the topics of process development, project management, and compliance in his books and articles. He currently serves as President of Bright55, a company that offers BPM and PM software.

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