This quote by Peter Drucker, the management guru whose words I still swear by, is very much true when we talk of software development in general, and Agile development in particular.
While that may sound too theoretical on the face of it, let me tell you how it manifests in real life. You want to construct a new house. You have the blue prints passed and ready to build. But when you go to the building contractor, they tell you that they will build the best ever house for you, exactly the same as you want, but don’t give you a time limit or a price. How would you feel? Not confident at all. To be able to arrive at a price, the contractor will need to factor in material costs, labor costs, the days off, the time to be taken, and much more. Only then can an estimate be given. All the same, you do need a figure to start the contract.
Same is the case with Agile development. The biggest challenge here is that software development is not a static task, just like the house we talked about. As the project starts to develop, requirements are very likely to grow and change before a final product is arrived at. That is what makes it difficult for developers to hand out a figure right away, unlike in the Waterfall method.
If we really wish to go to the root and find how to estimate cost of Agile software development, there are some concepts that we need to clear in our minds.
1. You cannot Avoid Changes in Software Development
Those developers as well as businesses, who believe they have the power to predict the exact scope and time of a developing, must know that it’s only a misconception. And this very misconception is what makes a lot of businesses nervous about the Agile process.
Software development in itself is a highly intricate process. There are only few constants you can control, but many variables that you do not have direct control over. As one digs deeper into the precise requirements for any software, is when one realizes that needs keep changing.
Agile development caters to this precise challenge in development by allowing you the flexibility to adjust and incorporate unprecedented changes in requirements at a desired point along the course of development. The Agile process, in fact, tries to strike a fine balance between the technical bent that the developer has and the business bent that the customer has. It helps both the parties, at different points of time in the process, and land at a desirable point.
2. It Enables Better MVPs through Short-Term Releases
Agile follows an iterative and incremental approach which provides the much needed clarity on what is to be planned and executed for each consecutive week in the development process.
With these short-term releases, the developer can have client feedback each week instead of waiting for months at end for the final feedback about the final product. This way the gradual progress can be shared and tested with an initial set of users including the client.
This becomes an iterative process as some functionalities are presented to the client during every sprint, feedback is taken, and then included in further sprints until the product has all the planned functionalities and can be launched as an MVP.
It provides the most efficient mode of direct communication between the developers and the client. This way, by breaking a gargantuan task into smaller, digestible steps, the client is also able to see steady progress on the project, rather than getting surprised at the end.
3. Agile can Be Cost-Saving
As compared to the Waterfall method, cost estimation in an Agile framework looks very difficult to the developer and rather overwhelming to the client. And that is when most clients turn towards a fixed cost project.
The truth, however, is that since the software development requirements will change more often than not, any changes after the final delivery of the product will escalate the cost. And that escalation may happen with every iteration. If you add up all these costs. Agile development only seems like a cheaper bargain, with better and consistent results, and an MVP that has a much shorter time to market; that can be tested out in real market. And in case the market response is damp, a business has happened to spend less on a prototype than on an entire project.
Agile, therefore, allows the developer as well as the client to save additional additional costs. It also permits one to arrive at a monthly budget.
Factors that Affect the Cost of Agile Development
Now that I’ve discussed Agile benefits at length, it is the right time to let you know about the factors that affect the cost of Agile development.
This is one of the most basic factors that can help you determine a part of the cost. The cost of the work is directly proportional to the number screens/user interfaces since that decides the magnitude of the effort (in terms of man hours) that will have to be put in.
Anything from 10 to 20 screens qualifies as a small project; 20+ to 40 as medium; and anything above 40 screens is considered a big one.
The complexity of the project governs the cost as much as its magnitude. It will include the backend technology that will be employed, the complexity of the code and testing methods required, UX research, design, functionalities, third party application or system integration, etc. By complexity is also meant data migration as required by different frameworks.
The Client’s Budget
That is the biggest concern on the client’s side. 3 out of 10 clients come with a limited budget. In that case, the negotiation would be about limiting the number of screens, functionalities and complexity. Otherwise, in case the client still needs to make more additions, the budget needs to go up.
The developer needs to take a call if so much as the client proposes, can be done within that budget with the required technology, frameworks, and resources, and within that timeline. Apart from that, re-iterations and additions should be taken into account before a budget can be agreed to.
How to Go about Agile Development Cost Estimation?
Here are a few steps you need to take in order to estimate the cost of Agile development:
- Discuss any doubts, gaps, or queries that exist in relation to the existing initial project document. This will enable the developer to gauge the scope of the project correctly and define the correct Agile process.
- The discovery phase starts, and the UX analyst reads into the client’s customers to present complete information architecture for the product as an overview of the system.
- Once the stakeholders and the development team are on the same page, the prioritization method is used to attach priority to requirements as ‘must have’, ‘should have’, ‘could have’, and ‘won’t have’.
- The “must-haves” are then included as the requirements the Minimum Viable Product (MVP). A backlog is then created for the MVP. It may also contain some of the features from the “should have” list to be able to make it marketable.
- Once the MVP backlog is made, the discovery team (business analysts, UX resource, and the development team) estimates time as well as cost needed for the first release.
- This is followed by iterations up till a point when an estimate figure is reached which is agreeable to both parties.
- Changes, additions, and growth in the project is a part of the Agile process and must be taken into account.
But How to Arrive at a Concrete Figure?
There are three major ways in which one may arrive at a figure.
The Expert Opinion Method
Agile methodology stands at the risk of incorrect estimation if the cost is decided by a gut feeling about the size of the project (something that Waterfall methodology does). Concepts like user stories and user-oriented functionalities are factors that bring one closer to a correct estimate. The tasks here, however, are not singly owned, the experts here, in UX and development, can arrive at an estimate in a short time.
The Analogy Method
This method can actually support the previous method. Here one compares the project in question with a project that one may have delivered before. The idea is to estimate the cost by drawing comparison between user stories or finding similarities/ scales of comparison, to be precise. But, all user stories cannot and are not measured against a single benchmark. Triangulation technique is used to estimate a new user story with those which one has already estimated.
The Disaggregation Method
Here one simply splits a user story into smaller pieces that are easier to estimate, especially if the project includes a spectrum of user stories, which can take days to estimate. Disaggregating the bigger user story into smaller stories, can help in better estimation.
Agile development does face challenges primarily due to the difficulty involved in cost and time estimation. Nevertheless, it proves to be time-efficient as well as cost-efficient for all the parties involved. If you are looking for Agile development of your software, we can help. Simply get in touch with us for a FREE consultation.