The document discusses the problems caused by underestimating software project timelines and costs. It notes that research shows development teams almost always underestimate, often by a factor of two. This leads to understaffing, insufficient planning, and more defects, which drive up costs and cause schedules to overrun. Accurate estimation that avoids underestimating is preferable, as it allows for the most effective planning and predictable delivery.

1. Cost of Estimation Error The Software Industry’s Estimation Problem
Some people refer to the “software estimation problem”
as though it were neutral: some project teams overestimate
Cost, Effort, Schedule and some underestimate. Research shows, however,
that project teams almost never overestimate.
What’s the Harm? Underestimation: Undermined Planning The average project team underestimates by a factor
of two! Software does not have a neutral estimation
“I need the software in three months, so I’ll
Assumptions and Shortchanged
problem; it has an underestimation problem.
tell the development staff that I need it in
Upstream Activities
two months. I don’t think they can actually When a project is underestimated to any significant
deliver it in two months, but at least that will degree, project plans will be based on the assumption
ensure that I get it in three months.” of a smaller-than-actual project. This leads to planning
mistakes including understaffing the development
This rationale is intuitive and appealing. But it
team and underscoping important upstream work.
is ultimately destructive to software project costs
This underscoping leads to mistakes that increase
and schedules. Projects that could have been
defect rates and ultimately increase project cost and
completed in three months end up taking four
schedule. It also leaves little time to address the
or five months because of the problems
unforeseen issues that inevitably arise.
caused by such reasoning.
Underestimation causes a project to be
underscoped and underplanned. That increases
the number of mistakes that occur upstream.
These mistakes must be corrected eventually—
at much greater cost than if they had been Accurate Estimates:
corrected earlier. These mistakes erode cost The Holy Grail
Overestimation: Parkinson’s Law
and schedule and virtually eliminate mid-range Estimation errors of 5-10% in
to long-range predictability. either direction create only Overestimated projects can run afoul of
minor problems. But the goal Parkinson’s Law—the idea that work expands
Skillful project planners strive for accurate
is “As accurate as possible.” to fill available time. If a developer is given five
estimates, and they especially strive to
Accurate estimates support days to do a task that could be completed in
avoid underestimating.
the most effective project four days, somehow that work will expand to
plans, shortest schedules, fill five days. Parkinson’s Law is a valid concern,
Construx’s estimation consulting and lowest cost, and most but strong project management is a better
training offerings are based on the
best-selling book Software Estimation: predictable delivery of response to it than biasing estimates is.
Demystifying the Black Art, by business commitments.
Construx’s founder, Steve McConnell.
S O F T WA R E D E V E LO P M E N T B E S T P R AC T I C E S
www.construx.com • Phone: 425.636.0100
Training • Consulting • Software Engineering Resources Underestimation Estimation Accuracy Overestimation