Software Development Time Estimation Guide

Learning how to estimate software development time correctly will take your development business to the next level.

This was one of the biggest challenges we had here at Daxima when we first started. 

How long will a project take? 

How much time each day will we need to invest? 

What key milestones should we care about? 

How do we keep the client happy when they’ve been waiting for 6 months for their MVP?

It’s not easy.

That’s why we created this guide to software development time estimation.

In it, you’ll learn some of our top tips, frameworks you can use to estimate time, and a few other key tidbits that we think might help.

Ready? Let’s begin.

Key Takeaways

• Define scope and break tasks down: Start with a clear understanding of project scope, break it into smaller tasks, and assign realistic time estimates.
• Build the right team: Choose skilled team members whose expertise matches the project’s needs, whether it’s a mobile app or large-scale software.
• Use proven estimation techniques: Rely on methods like historical data, bottom-up estimation, and Agile methodologies to create accurate timelines.
• Factor in risks and buffers: Always account for potential risks, dependencies, and extra time to handle unexpected challenges.
• Communicate and adjust: Involve the team, track progress, and be transparent with stakeholders to keep timelines realistic and flexible.

Why Is Software Development Time Estimation Crucial?

Time estimation in software development is key because it keeps everyone on the same page—teams, clients, and stakeholders all rely on it to make informed decisions. 

Let’s face it, building software is tricky. 

There are always unexpected hurdles, like changing requirements or technical challenges. Estimating time helps you plan for these and avoid surprises. 

At Daxima, we prioritize clear timelines for every project. 

For example, when we work on custom apps, we break the work into smaller pieces and estimate each step. 

This way, we deliver on time and meet our client’s needs without cutting corners or overpromising.

Common Challenges in Software Development Time Estimation

Our clients’ biggest software development time estimation challenges are dealing with unknowns, managing shifting priorities, and handling unexpected setbacks. 

These issues can make even the best-laid plans feel shaky.

• Unclear requirements: If the scope isn’t fully defined, it’s tough to know how long the work will take.
• Scope creep: New features or changes can stretch the timeline and throw off the original estimate.
• Technical roadblocks: Bugs, integrations, or compatibility issues can pop up and slow things down.

Pro Tip: At Daxima, we tackle these issues by starting every project with a detailed discovery phase to clarify scope and uncover potential risks early.

Techniques for Estimating Software Development Time

There are several ways to estimate software development time, each with its own strengths. 

Our favorite is combining historical data with bottom-up estimation because it’s both practical and precise. 

Below, we’ll walk you through the most popular techniques to help you decide what works best for your project.

Use of Historical Data

Using historical data means looking at similar projects you’ve completed before to estimate time for a new one. 

It’s a straightforward way to predict timelines without reinventing the wheel. 

This method works best when your team has handled similar work in the past. 

For example, at Daxima, we once used data from a mobile app we built to estimate the time for another app with similar features. 

It works well because it immediately gives you a rough estimate.

Analogous Estimation

Analogous estimation is when you make comparisons to other projects you’ve done in the past. 

You take a high-level look at a previous project and use that as a benchmark for your current one. 

It’s quick and helpful when you don’t have all the details yet. 

We recommend it for projects like prototypes or proof-of-concept builds where you’re just trying to get a ballpark idea of the time involved.

Bottom-up Estimation

Bottom-up estimation involves breaking the project into smaller tasks, estimating the time for each, and then adding it all up. 

It’s a method we love for detailed projects because it leaves little room for surprises. 

For example, when building a custom CRM system, we estimated the time for every single task—like designing the login flow, creating the dashboard, and integrating the database. 

It’s more work upfront but pays off with highly accurate timelines.

Top-down Estimation

Top-down estimation flips the script by starting with an overall project estimate and breaking it into smaller chunks. 

It’s faster than bottom-up and is great for situations where you have a fixed deadline or budget. 

For instance, if you’re building an MVP for a client launch, this approach lets you focus on the big picture without getting bogged down in tiny details.

Parametric Estimation

Parametric estimation uses data-driven calculations to predict time based on project variables, like the number of features or lines of code. 

This method is perfect for projects with measurable elements, such as automation workflows or reports. 

For example, we once estimated the time for a logistics system by calculating the hours needed per module, which gave us a solid roadmap to follow.

Three-point Estimation

Three-point estimation is a smart way to account for uncertainty. 

You calculate three scenarios: the best case, the worst case, and the most likely outcome. 

Then, you average them out to get a balanced estimate. 

This technique is particularly helpful for projects with unpredictable elements, like integrating a new third-party API where unexpected delays are possible.

Function Point Analysis

Function Point Analysis measures the size of a project based on features like inputs, outputs, and system complexity. 

It’s a structured method that’s great for feature-heavy systems. 

For instance, when working on an e-commerce platform, we used this approach to measure components like inventory management, user accounts, and payment processing. 

It helped us create a detailed plan and set clear expectations.

Agile Methodologies

Agile estimation relies on iterative cycles to adjust timelines as the project evolves. 

Tools like story points and planning poker make the process collaborative and flexible. 

This is perfect for projects where requirements are likely to change, like startup apps that adapt to user feedback. 

Agile keeps everything dynamic and responsive, which clients love when they need room to tweak their vision along the way.

Steps to Accurately Estimate Software Development Time

Here is our internal process to accurately estimate software development times that we’ve been using for two decades. 

It works for us, so we’re sure it’ll work for you too (or maybe you’ll just want us to do it for you!):

Define Project Scope and Complexity

The first step is defining the project’s scope and complexity. 

This means understanding exactly what the project will deliver and how challenging it will be to build. 

Without a clear scope, it’s nearly impossible to create an accurate estimate. Here’s what to figure out:

• Core functionality
• User requirements
• Technology stack
• Third-party integrations
• Team size and roles
• Project risks

Pro Tip: Create a one-page project summary with all this information. It’s a great reference point for your team and clients as the project progresses.

Prepare a Detailed Task List

Creating a detailed task list is where you break the project into smaller, manageable pieces. 

This helps you understand what needs to be done, how long it might take, and who will handle it. 

A clear task list is the backbone of accurate time estimation.

Here’s what to include:

• Major milestones
• Individual tasks
• Dependencies
• Task owners
• Estimated times

Choose the Right Team

You need to find the right people for the job because your team’s skills and experience will make or break the project. 

For smaller projects like mobile apps, you’ll need a team skilled in mobile-specific frameworks like React Native or Swift, along with a strong UI/UX designer to create an intuitive interface.

For larger software systems, such as enterprise applications, look for developers experienced in backend architecture, database management, and integration with third-party tools. 

A strong project manager is also key for keeping everything on track.

Conduct Collaborative Team Meetings

Collaborative team meetings are where ideas come together and potential roadblocks are identified early. 

These meetings should include everyone involved in the project—developers, designers, and stakeholders. 

Use this time to clarify expectations, review task assignments, and address questions. 

Regular check-ins help keep the team aligned and ensure that timelines stay realistic, even as the project evolves.

Establish a Realistic Project Timeline

Once you have a clear scope and task list, it’s time to build your timeline. 

Start by mapping out major milestones, then add in smaller tasks with realistic deadlines. 

Be sure to include buffer time for testing or unexpected delays. 

A well-planned timeline isn’t just about deadlines—it’s a tool to keep everyone accountable and focused.

Monitor and Analyze Progress Throughout the Development Lifecycle

Tracking progress during the project ensures you stay on course. 

Use tools like Gantt charts or agile boards to monitor completed tasks and identify any bottlenecks. 

Regular progress reviews help you adjust timelines if necessary and keep stakeholders informed. 

By staying proactive, you can avoid surprises and keep the project moving smoothly.

Key Factors to Consider During Time Estimation

We’ve been estimating software development time for decades, so we know exactly what to look for. 

Every project is different, but there are a few universal factors you should always consider when creating your timeline:

• Project complexity: How intricate are the features, integrations, and technical requirements?
• Team expertise: Does your team have experience with similar projects or technology?
• Resource availability: Are the people, tools, and technologies you need readily available?
• Scope clarity: Is every requirement and deliverable clearly defined?
• Potential risks: What are the chances of unexpected challenges, like scope changes or technical roadblocks?
• Dependencies: Are there external factors or third-party systems that could impact progress?

By focusing on these factors, you can create estimates that are realistic and reliable.

Best Practices for Time Estimation

If you want to take your time estimation game to the next level, here are some of the best tips we’ve learned over our years in the business:

• Start with a discovery phase: Take the time to understand the project’s requirements and scope before estimating. This reduces the risk of surprises later.
• Involve the whole team: Bring developers, designers, and project managers into the process. They can spot potential challenges and provide realistic input.
• Break it down: Smaller tasks are easier to estimate than large, vague milestones. Use methods like bottom-up estimation for precision.
• Account for buffer time: Unexpected delays happen, so always include extra time for testing, debugging, and last-minute changes.
• Learn from the past: Use historical data from similar projects to guide your estimates and identify patterns.
• Be transparent: Share your methodology and assumptions with stakeholders so everyone understands how the timeline was created.

Conclusion

By following these practices, you can set clear expectations and build trust with your clients and team.

Accurately estimating software development time is essential for delivering successful projects. 

By following these steps and best practices, you can create timelines that are realistic, reliable, and keep everyone on track. 

If you need help with your next project, contact us at Daxima—we’re here to make it easier for you!