Software development is a daunting task and what makes the whole process even more challenging is to determine the complete project cost in terms of time and money. There goes a lot in each and every software project and it becomes a very difficult task to arise at all those indexes, estimating their cost in terms of time and money and then giving a nearly accurate idea about the whole estimate. Hence, these profiles like Business Analyst, Solution Architect, and Project Managers are an inseparable asset of a Software company as they work on these estimates.
Not just this, these profiles have to identify different factors going in the development and explain the logic behind each one of them. The task gets even more intimidating when some factors are left undiscovered. It is like renovating a house where you do not know what trouble awaits you. This, in turn, results in the escalation of the time as well as project cost.

Once an estimate has been given, a clear idea has to be made if the progress made is in sync with the estimated cost. This has to be done from time to time to make sure that the project is going on the right track.
Well, seems like a super challenging task.

So, let us divide it into parts to make the process a little simpler. Software development cost estimation has direct and indirect costs.

1. The direct cost is made up of the total time and efforts that are spent on the project like salaries of developers, cost of hardware and the expenses on other things that goes into project making.

2. The indirect costs are made up of quality control, audits, security issues and more.
Determining, direct cost is easier than indirect costs as they vary hugely from project to project.

Breaking it into even simpler pieces we get different categories of expenses that make up a software project cost:

• The cost of human effort expended towards project objectives.
• The cost of resources needed to create products.
• The cost of buying and maintaining equipment used in project work.
• Non-physical computer resources and Physical computer resources.
• The cost of renting or using specialized equipment, services, or locations.

Size of the Project

Understanding the size of the project and then arriving at an estimate. For that, what is to be done is to see what is the kind of user interface you will be building and how many pages will it have? This includes analysing the number of screens that will be built and how much time and effort will go in making one. So, the bigger the application or website is the more will be the project cost.

Internal valuation

This is the cost we arrive at by considering the working capacity and the ability of a particular organization. This means that a firm has to determine the cost in terms of the input available with them like staff salaries, staff capabilities, resources available, organizational expenses, hardware requirements from outside. In this project managers, should get an idea from the previous projects they worked on and then arriving at a decision.

Structure of the project

The structure of the project will have a lot of bearing in the cost like how simple or complex it is. What type of technology will go in the making of this project, the kind of coding and testing it will require, are there any specific designing requirements, what is this application for, is there any needs for special data processing systems to be integrated in the app, do you need any specific hardware or software in the project development, If the app needs to be integrated with third-party apps, how many payment gateways need to be added in the app? By analysing all these factors, you can arrive at a nearly accurate project cost.

Use specially designed project management software tools

These online tools like SmartSheet, CoMindWork or DevPlanner help a lot in planning and keeping a track of the project. They have special features which help in breaking down the project in simpler parts and estimating the cost of each one of them. Also, it allows you to keep a track of the time schedule and price spent on each leg of the project to keep a check on estimated cost and reality.

Budget estimate

Sometimes the project has to be completed within the threshold of the given budget. So, in that case, if the client wants a number of features, then the developers will ask for prioritizing the features that are very important and the rest have to be left or the developers have to find a solution to integrate those features with some substitutes at work. This will have an effect on the kind of technology and the kind of software, coding that goes into working. So, have an idea about the budget before starting the project and also talk to the client that if he would be willing to give some extra bucks or extra time before final delivery of the project.

Conduct a risk analysis

For those identify the factors that could impact the cost and time of the project completion. By this what is to mean is to conduct a thorough risk analysis wherein you will be required to identify all optional factors that could come up once the project is in making and how much it will affect the time and cost of the project. These potential events could be both threats and opportunities but identifying them before the beginning of the project life cycle can help you accurately determine the costs.

Evaluate your software development budget

The project managers should keep a constant watch on the project and should analyse the actual and estimated performance for each leg of the project. This comparison has to be in terms of cost and time. So, keep a constant track of project performance and progress in terms of scope, schedule, and cost.
Out of the many ways to develop project development estimate, the best that has worked for the maximum number of projects is this approach where the project is broken into different legs of work, and leg of work is estimated which gives a better and accurate idea.

Here are some ways of doing it:

Break the project in smaller chunks of work to get accuracy in the estimation process

Start by breaking the project into smaller tasks and assigning each task to a developer. Now, keep a check on estimated time and cost and the reality of the project progress. This way you can get an estimated idea about the cost and also the client can be kept updated about the development. The time will also work in sync with different milestones set and by fulfilling them in a timely manner. This will surely increase the time consumed in the estimation process but in the long run, this will surely reduce the time of project completion and will help the client better understand the software process.

Involve the clients in software project estimation process

This includes having an open and upfront discussion with the clients about the projects, the different factors being used and the logic behind these factors and technology, the budget the clients is willing to spend, how much flexibility can be used in terms of both the cost and time. This helps both the client and the IT firm to reach a common, shared and mutually agreed on development process within pre-defined guidelines of time and cost.

Create the right team for the project

Once you have broken the project into smaller pieces you know which leg of the project requires what kind of developer or team of developers for project completion? So, accordingly, you will have to create the right team with all kinds of Human resources you need like Business Analyst, developers, quality analyst engineers, project manager, designer. Creating such a versatile team will help in creating good and quality code that meets all of the requirements, budget, and timeline.

By now you must have understood that software project estimation is a vast and challenging process. It requires understanding from the structure of the project to going into the smallest details to get a clear and complete idea about the project requirements.

This indeed is a very important step of software development as what the entire client us looking for is a team which can offer the best value for money i.e. which can complete and deliver within the estimated budget and time frame. So, it is important to spend as much time on software estimation as much on software development. This will ensure a good and smooth flow of working and satisfactory client relations.