The Ultimate Guide to Software Project Estimation [Example Template]

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Damien Filiatrault
Founder & CEO
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Originally published on Jun 14, 2021Last updated on Jan 4, 2024

Key Takeaways

What is software project estimation?

A Software Project Estimation helps define the resources (people and tools) you’ll need to build your project by listing specific tasks, how many hours it’ll take, and how much it’ll cost (roughly).

How do you estimate software development?

First, you’ll need to write a Product Requirements Document, which defines your project goals and the problems it solves for the end user. Once you have that document, you’ll define foundational tasks like user log-in and password reset flows, and estimate how many developers and designers you’ll need to complete the project, what kind of tools you’ll need to build out the software platform, and how much it’ll all cost.

How can we calculate the cost of software development?

There are two common ways to estimate a project by either breaking down the team or breaking down the project tasks. A team estimate is a top-down approach. For example, “Who will I have on my team, and for how long?” This is an estimation from an Agile perspective.

A task estimate is a bottom-up approach that comes more from the Waterfall School of Planning. You’ll outline the foundational tasks and user flows and estimate how many hours a developer and perhaps a designer will need to complete the tasks. You’ll list out all the foundational tasks, add up the hours you’ll need, and multiply it by the hourly rate of the freelancers to get the total estimated hours.