Get better at software project estimates – and software project management overall – with thirteen of our best practices.
Software project estimation can be tricky. So much so, that, in some software development companies, it actually isn’t included as part of the project planning process.
Given how accurate project estimation contributes to profitability, timeliness, and stakeholder satisfaction, that seems like a big mistake.
But don’t worry. We’re here to help take the pain out of the process, so you can create accurate estimates that keep schedules rolling, resources productive, and projects profitable.
In this article / TL;DR
1. Clarify requirements (to the point of being pedantic)
2. Don’t forget non-coding activities (2x your estimate)
3. Factor in the human element (schedule to 85% capacity max)
4. Use historical data to predict future needs
5. Use tried-and-trusted estimation techniques
6. Ask experts for their estimates…
8. Scared of commitment? Use a range
9. Build in buffers for risk (say 10-30%)
11. If you have to estimate, OVER-estimate
12. Review your accuracy to improve it
13. Use the right tools (and we don’t mean spreadsheets)
The point of a software project estimate is to accurately assess the time and resources needed to create a deliverable, as well as what it will cost, and how much profit it will yield.
To do that, you need to understand EXACTLY what the client requires. What features are non-negotiable vs. nice-to-have? What are their expectations around performance and security? And so on.
So the first step to improving software project estimations is to get granular about requirements. If you assume nothing and clarify everything, you’ll be able to write a solid Work Breakdown Structure, and be in the best position to create an accurate project estimate.
A one-track mind can derail your project estimates. So remember – it's not just about coding. You also need to consider everything else.
Alongside coding activities, your project is going to include meetings. Lots of them. Plus code reviews, testing, and documentation.
If you don’t factor in the essential non-coding elements of software development, your estimates will be inaccurate. As a rule of thumb, Vadim Kravcenko suggests you 1.5x or 2x your raw coding time estimate, to get an estimate of the complete time you’ll need on a project.
The human element of resource management in software engineering is something we’re obsessed with at Runn.
‘Resources’ are people and they don’t function like machines. They need careful management to bring out their best – and to reduce the risk of software engineer burnout. As we covered in our exploration of top software sector trends for 2025/26, overworking and burning out developers is unfortunately endemic in the industry
When you’re estimating a software project, factor in time for the unpredictable human element. Like when people are less productive or off sick. Don’t expect 100% capacity utilization, 100% of the time – people need breaks or they will break!
As a rule, schedule 80-85% of people’s time, and you won’t be far off.
Keep reading: New to tracking the working hours of your team? Try building a utilization report ➡️
No two projects are the same and using a one-size-fits-all approach to software project estimation won’t work. But that doesn’t mean you need to start from scratch every time. If you’ve completed similar projects before, it makes sense to see what they entailed, how long each element took, and what resources they required.
No, it’s not a copy-and-paste situation, but it's a great jumping off point for your next project estimate. In fact, this approach has a name – analogous estimation – which leads us nicely onto our next tactic.
There are numerous tried-and-trusted ways to estimate project requirements. We’ve just discussed one, analogous estimation. But there are others.
Find in-depth pros, cons, and how-tos for each of these project estimation techniques by clicking the links, then decide what’s best for your needs. You can combine these estimation methods to help refine your final forecast.
Expert judgment involves consulting with individuals or groups who have relevant expertise in the project needs, to determine an informed estimate. But how exactly do you do that in an efficient and structured way? And how do you make sure that one particularly vocal individual doesn’t crowd out quieter voices and sway the results?
You need to build consensus, giving everyone a chance to have their input – and there's a few ways of achieving this. For example, you could try a technique like Planning Poker or the Delphi method.
These techniques aggregate and refine people’s opinions to arrive at an average. You can then confidently can base your project estimate on that.
You don’t have to consult experts when you’re creating your software project estimate. If you’re confident about the project needs, and comfortable with different project estimation methods, you might be ok to go it alone.
But it’s wise to involve them at some point, so be sure to at least validate your estimate with people in the know. They can confirm your numbers, highlight anything you might have overlooked, and suggest adjustments to make your estimate more realistic and robust.
If you’re cautious about providing stakeholders with a firm estimate, you can use a range, based on a three-point estimation approach.
With this technique, you create optimistic, pessimistic, and realistic estimates. That way, you’re not committing to an estimate that could come back to bite you in the…future.
Instead, you communicate the best, worst, and most likely scenarios, so stakeholders understand the uncertainty involved.
Further reading: Wondering how this helps you actually plan your schedule and resources? Check out this article on scenario planning ➡️
No project is perfectly predictable. Can you imagine? You create a project plan, and everyone sticks to it, and nothing goes wrong. Heaven!
But since we don’t live in that perfect world, always build in a buffer for uncertainty and unknowns.
These could be human factors like we discussed above (looking at you, winter flu season). Or they could be shifting internal priorities that see key resources reassigned. Or client changes that shift the project scope.
These out-of-your-hands elements will be easier to absorb if you’re scheduled a little bit of slack into things from the start, especially around any project unknowns or areas of risk.
One way to do this is to:
Effort and duration are easily confused. But mixing them up can lead to unrealistic deadlines or expectations.
Imagine a user story requires 10 hours of effort… on paper. If a project manager takes that at face value, they could schedule only two days for the work.
But if the developer can only work on it for a few hours a day, that story could actually stretch across five consecutive days. That’s a three-day delay to the schedule on a single task.
To avoid this, once you’ve determined effort, track likely durations on a project calendar, based on resource availability. This will help avoid schedule slips due to resource constraints and ensure your predicted project duration is realistic.
One of the purposes of estimating software projects is to keep stakeholders informed and happy. They'll know what to expect, and when.
But if you really can’t arrive at a firm project estimate and you’re sticking your metaphorical finger in the wind, it is always better to over-estimate than to under-estimate.
Underestimating is a common trap, especially when you’re dealing with unfamiliar technologies or project types. Being conservative in your estimates helps absorb the impact of unknowns and reduces stress for both the team.
Remember, stakeholders are never going to be annoyed that projects are coming in faster or cheaper than you told them. But tell them that they’re going to take longer and cost more. Ouch, rather you than us!
You may have already looked back at historical data and past projects as part of your estimation process. But once your project is over, look back again.
This time, the aim is to see how accurate your estimate actually was. Reviewing whether your estimate panned out in practice will improve your forecasting accuracy next time round.
Compare planned versus actual budget and schedule to see how well you predicted costs and durations.
Next, look at resource utilization rates during the project. If people were overutilized, this risks employee burnout and mistakes, and you need to schedule more time in future. Or if they were underutilized, that is a waste of project budget, so you could tighten things up next time.
Accurate software project estimation is much easier to achieve if you have relevant data at your fingertips. And that means having the proper tools for the job. Resource management software makes project estimation significantly easier to get right, not just because of the data it collects, but how it presents it.
Purpose-built resource management software provides at-a-glance insights into planned vs actual metrics and resource utilization to perfect your estimates. It also collects project data over time, so you have a bank of insights to draw on for analogous and parametric estimation.
Plus, it visualizes capacity and workload against schedules, so you can easily spot potential risks and constraints, and plan resource allocations around them.
Estimating software development projects doesn’t have to be a headache. By applying the best practices we’ve covered – clarifying requirements, accounting for all work, tracking both effort and duration, and validating estimates – you can improve estimation accuracy and set your team up for successful project completion.
Tools like Runn make this process far easier. With real-time insights into resource allocation, capacity, and workloads, Runn helps IT project managers create accurate estimates, plan software projects effectively, and increase the likelihood of project success.
