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- Estimation and Pricing (RSS) (14)
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Estimation and Pricing
Estimation of effort, and costing/pricing, for software development projects
Bayes’ Theorem Demystified
Bayes’ Theorem is an important tool when analysing probabilities. It helps us to avoid cognitive traps and make better decisions. However, it is usually presented as something difficult, or even controversial. The typical article on Bayes’ Theorem stresses how difficult it is, and then goes on to bemoan the fact … Read more
Estimation Summary for Agile Projects – Nov 2011
It’s over 7 years since my first post on contracts for agile projects. During the years since I’ve worked almost exclusively on agile projects with fixed scope, learning some real-life lessons along the way.
So here are some of the key points that now I keep in mind when considering … Read more
Million, Billion, Trillion
Humans are bad at understanding large numbers. Our education system successfully trains us to understand the relative magnitudes of small numbers, but for larger numbers we tend to fall back on an intuitive logarithmic scale. So we underestimate the real difference between, say, a million and a billion.
Here’s … Read more
Fallible estimates + Competition = Winner’s Curse
Some time ago Steve McConnell and I had an interesting debate, via his blog. I suggested that when we combine estimates such as those we have in software (which have high uncertainty early in the project) with a competitive market containing price-sensitive customers; then market forces conspire to bias … Read more
Target Cost Contracts
This page outlines one way to formulate Target Cost Contracts for agile software development.
The goals of this approach are to:
- Share risk fairly between Customer and Supplier
- Give the Supplier the peace of mind of being protected from significant cost overruns
- Offer enough flexibility to get the best out
Estimation in a Competitive Context
I’m debating an issue with Steve McConnell, over on his blog, and I’d like to hear what others think of the issue.
I have a theory that, when multiple suppliers are competing for the same contracts, market forces encourage selection of those suppliers who have under estimated (either knowingly … Read more
Cutting Scope is Not the (Whole) Answer
Many agile proponents advocate the “Cancel-After-Any-Phase” approach. Work is prioritised by business value and the customer can halt the project after any phase. You can fix price or scope, but not both. Most commonly, the price is fixed and scope is cut if necessary.
This approach is a … Read more
Effort Creep
While scope creep is doing more work than you expected, due to added scope; effort creep is doing more work without added scope. You’re just taking longer to do the same stuff.
Like scope creep, effort creep is inevitable and manageable. To manage effort creep we need to understand … Read more
Gurus on Contracts
Martin Fowler is well-known industry guru, respected by virtually everybody (including me). He suggests you can’t use agile processes on projects with fixed price and scope. Alistair Cockburn – who is a well-known industry guru, respected by virtually everybody (including me) — says you can. To resolve this apparent … Read more
Beware the Lowest Price
Awarding contracts to the lowest bidder is optimistic at best, dangerous at worst. So why do we keep doing it?
There are many reasons. To pick just one: we believe it works in “real” engineering – making bridges, roads and buildings.
But it doesn’t. Although it is widely used in … Read more