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Cost tends to be estimated more accurately than effort Although underestimates are again more common and larger than overestimates, really bad errors are rare, and most errors are smaller than is seen with effort Estimated and actual costs can be analyzed for 117 projects: 21 percent overestimated cost by at least 10 percent (median overestimate is 28 percent) Eleven percent overestimated cost by at least 20 percent (median overestimate is 46 percent) 44 percent estimated cost accurately to within 10 percent, and 64 percent estimated cost accurately to within 20 percent 35 percent underestimated cost by at least 10 percent (median underestimate is 44 percent) Twenty-five percent of projects underestimated cost by at least 20 percent (median underestimate is 67 percent) The proportional size of these groups is about 1 (overestimate) to 6 (accurate) to 2 (underestimate) for accuracy within 20 percent, and 2 (overestimate) to 4 (accurate) to 3 (underestimate) for accuracy within 10 percent These statistics should be treated with some caution Ten percent of projects report their actual cost as being exactly the same as the estimated cost Considering that some of these involve six-figure costs that are quoted to the nearest $10, this seems unrealistic Most of the projects in which cost is overestimated are small, of fewer than 200 FP; the median is 125 FP Not surprisingly at this size range, enhancement projects dominate No other patterns are evident
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When cost is underestimated, for six projects the errors are huge (300 percent to 900 percent), another five exceed 100 percent, and a further seven exceed 50 percent When the six huge errors are excluded, the mean error is an underestimate of 46 percent; the overall median error is an underestimate of 44 percent
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Note For projects with cost underestimated, the median error is an
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underestimate of about 45 percent A clear trend can be seen when estimation techniques are considered: FP-based techniques are more accurate more of the time For projects using just work breakdown techniques, 42 percent are accurate to within 10 percent; a further 12 percent are accurate to within 20 percent; nearly half misestimate cost by 20 percent or more; underestimates are twice as common as overestimates, and tend to be worse; and the median underestimate is around 50 percent For projects using functional size based techniques, 61 percent are accurate to within 10 percent; a further 30 percent are accurate to within 20 percent; and only 9 percent misestimate cost by 20 percent or more; the median underestimate is 14 percent
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Note When functional size based techniques are used for a cost estimate,
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the estimate is within 20 percent of the actual cost 90 percent of the time
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The overestimated projects are all small; the largest is 286 FP, the median size is 127 FP, and the mean size is 145 FP No other patterns can be seen between project characteristics and the accuracy of cost estimates When both cost and effort are known, the association between them is strong If the projects are ranked in order of effort error (biggest underestimate down to the biggest overestimate) and then ranked in order of cost error, the correlation between the ranks is very high at 079 Big errors in estimating effort go with big errors in estimating cost In summary, for around half of the projects the cost estimate is accurate Of the rest, underestimates are about twice as likely to occur as overestimates, and the error is likely to be greater Estimates produced using functional size based techniques are more accurate than estimates produced from a task breakdown and are within 20 percent of the actual cost 90 percent of the time
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A collection of over 850 projects has been analyzed to see how, and how well, people estimated their software projects
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