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"Project managers with software development experience: How do you create accurate budgets for custom software projects? I'm managing my first major software development initiative and strugglin

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Archana Meda India
"Project managers with software development experience: How do you create accurate budgets for custom software projects? I'm managing my first major software development initiative and struggling to account for all potential costs. Initial vendor estimates seem all over the place, and I'm concerned about missed requirements leading to scope creep. Are there any frameworks or tools you recommend for estimating software development costs that won't leave us exposed to major budget overruns?"
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Sergio Luis Conte Helping to create solutions for everyone| Worldwide based Organizations Buenos Aires, Argentina
First, understand an unique feature of the software products: intangibility. Second, readn and understand Barry Boehm work mainly Software Economics or, at least, Cone of Uncertainty. Third, if you will use "modern" way of working take a closer look to Lean Portfolio Management.
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Kiron Bondale Retired | Mentor| Retired Welland, Ontario, Canada
Archana -

If this is a new product/application, the reality is you won't create an accurate budget until the team has worked through key risks and got a high degree of confidence in their ability to deliver the solution. Taking a rolling wave approach might be better - for example, budget for a proven architecture and thorough exploration of key areas of technical concern first.

You could certainly get a reasonable Rough Order of Magnitude estimate, but recognize that provides a wide range as Sergio has indicated - could be as much as -50% to +200%.

Kiron
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Shahnawaz Alam Bengaluru, India
Creating accurate budgets for custom software in India requires breaking down the project into modules, getting time estimates from developers, and applying a 15–25% buffer for delays (festivals, power cuts, etc.). Always include hidden costs like servers, APIs, and testing. Use Excel to track module-wise hours and cost. Regularly review actual vs. estimated. If using freelancers, budget extra for delays. And don’t forget GST/TDS when billing or paying.
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Archana Meda India

Thank you all for the insightful responses — they've been incredibly helpful!



Sergio, I really appreciate your mention of Barry Boehm's work and Lean Portfolio Management — definitely digging deeper into those.



Kiron, your suggestion about a rolling wave approach makes a lot of sense, especially considering how early we are in our initiative. It's reassuring to know that a Rough Order of Magnitude estimate is a realistic starting point, even with its variance.



Shahnawaz, your breakdown of cost components (like GST/TDS, API charges, and even festival-related delays) is a great checklist — thank you for that.



While researching further, I came across this detailed breakdown that helped me understand how to approach budgeting more strategically, especially when aligning technical complexity with real-world business constraints. Thought I'd share it here in case others find it useful:
👉 software development cost



Would love to hear if anyone else has frameworks or tools they use for refining budget estimates as the project progresses.

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