Effort Estimation: Significance and Design-Framework in Today’s IT Business Context

  Estimating   Knowledge Shelf  

Software development or IT services effort estimation is the process of predicting the most realistic use of effort required to develop or maintain software or to provide related services based on available scope and project environment. Effort estimates may be used as input to project plans, iteration plans, budgets, investment analyses, pricing processes, and bidding rounds. Typically, effort estimates are overly optimistic, and there tends to be a good deal of over-confidence regarding their accuracy. Today, customers are more interested in knowing all of the pricing factors and pricing influencers in any service deal; effort estimation (being a direct input to service price) becomes a vital success factor in today’s competitive business environment.

Organizations are looking for ways of reducing their expense budget across IT project portfolio. Time and material engagements put high pressure on customers to reduce the overall project effort, thereby impacting the price. At the same time, in fixed price projects, the performance pressure is on IT service vendors to efficiently manage the project within budgeted effort (output of initial effort estimate), which is directly linked to project/service profitability. Effort overrun is one of the most important controlling parameters to evaluate project management performance.

The industry dynamics, practices, and…

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